India will neither promote tax terrorism nor can it become a tax haven, according to Finance Minister Arun Jaitley, assuring a fair compliance window to those with ill-gotten money overseas to come clean, and a moderate tax regime to obviate such practices.
Addressing the annual session of the Confederation of Indian Industry (CII), the finance minister also promised to introduce the bill on pan-India goods and services tax in the ensuing Parliament session and a recast of laws that were preventing decision-making process in bureaucracy.
In the speech that addressed a host of issues pertaining to the corporate sector, as also some of the contemporary matters faced by his government, Jaitley conceded that the present Companies Act was posing irritants and that the previous law proposed on land acquisition was anti-rural India.
“We’re not a tax haven. We don’t expect to be one. India isn’t so vulnerable that every demand is termed tax terrorism,” Jaitley said with his comments coming in the wake of tax notices served on foreign funds for periods before 2012-13 and on companies for acquisition deals made overseas.
On the issue of black money stashed by Indians abroad, the finance minister said even though the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill of 2015 had been tabled by him in the Lok Sabha last month, there was room for changes and welcomed suggestions in this regard.
“A very reasonable compliance window will come for those who indulged in such misadventure in the past.” The new bill calls for 300-percent penalty on the quantum of black money abroad along with rigorous imprisonment of up to 3-10 years for perpetrators.
At the same time, the bill also has some amnesty provisions to bring such money back from abroad, allowing people to declare such assets within a prescribed time period, pay tax on it and retain the remaining amount.
It provides for tax to be charged at 30 percent of the undisclosed assets outside India as also a penalty of 100 percent of such tax, taking the effective rate of tax and penalty to 60 percent, leaving room for people to retain 40 percent of such declared assets.
The finance minister said India has also agreed to become a signatory to the US global tax evasion law — Foreign Accounts Tax Compliance Act of 2010 — that seeks to deal with evasion by its nationals wherein authorities and institutions on both sides will share information on money laundering.
India has no official estimates of illegal money stashed away overseas, but the unofficial ones range from $466 billion to $1.4 trillion.
Jaitley also spoke about the proposed new bill to facilitate acquisition of land for development and said the one proposed in 2013 by the previous United Progressive Alliance (UPA) government was clearly anti-rural India.
On the Companies Bill, 2013, Jaitley said it was rare that a new law required a series of amendments as many procedural difficulties had surfaced which were hurting the corporate sector. “We will see where the shoe pinches.”
Alluding to numerous cases of corruption against retired bureaucrats by probe agencies, Jaitley said a different yardstick is needed to look at errors or corruption in decision-making. But he felt in the absence of such a prism, decision-making was suffering.
“The language of the Prevention of Corruption Act is deterring a large number of civil servants from taking decisions,” Jaitley said, adding that a similar exercise was needed to recast the Companies Act for which the Law Commission has given its recommendations.
On the pan-India goods and services regime, the finance minister said the relevant Constitution amendment bill will be tabled in the upcoming budget session of parliament, after the current recess, while maintaining that the land acquisition bill of 2013 was flawed.
“The 2013 land law is hugely detrimental to rural India,” he said. “It has no provision for rural infrastructure. Even acquiring of land for irrigation has been left out and no land can be made available for rural electrification.”
His reference was to the new legislation proposed by his government which has been passed by the Lok Sabha, but still faces opposition in the Rajya Sabha, following which an ordinance was re-promulgated with a presidential order. (IANS)