Government to press ahead with Rs 40,000 crore tax demand on FIIs
April, 15th 2015
Finance minister Arun Jaitley on Tuesday said the government will press ahead with Rs 40,000 crore tax demand on foreign institutional investors (FIIs) as they lost a case against levy of tax on capital gains they made.
"FIIs went to a tribunal, which is called Authority for Advance Rulings (against levy of 20% Minimum Alternate Tax on capital gains). The tribunal has decided against them. I can change the face of India's irrigation with that Rs 40,000 crore," he said.
The BJP government, Jaitley said, has abolished MAT from April 1, 2015, but the demands pertain to tax related to earlier period and they wanted it to be waived. "To which I responded and said 'we are reasonable, so for the future I have waived it. But, the tax demand after winning the case, if I waive off, we will be like a tax haven ... how would be I answerable to Parliament that after the case I just waived Rs 40,000 crore."
On multi-billion dollar tax demands on Cairn Energy Plc of UK and Cairn India, Jaitley said the tax assessment orders were passed in January 2014 and demands were follow-up related notices. "Since they are entitled to challenge (notices) in court, we will see what the courts decide."
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Talking about the initiatives taken by the new government, Jaitley said in the last one year no retrospective tax law has been brought and "not a single new notice has been issued. My only problem is with regards to legacy issues that I inherited from the previous government". Jaitley also expressed hope that the bill for introduction of Goods and Services Tax (GST) will be passed in the coming session of Parliament.
Despite two rate cuts this year by RBI, finance minister Arun Jaitley on Tuesday said he wants interest rates to be "a lot lower".
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Jaitley also asserted there were no differences between the government and RBI. "My position very clearly is not very different with that of the Reserve Bank. We need to manage inflation along with growth. Now, we cannot afford to have inflation go up radicaly so RBI is little conservative and they try and manage the inflation so they are a little careful in lowering the interest rates."
RBI governor Raghuram Rajan had cut repo rate by 0.25% each in January and March outside scheduled monetary policy reviews. He, however, kept rates unchanged in the first bi-monthly monetary policy of the current fiscal earlier this month. Jaitley said "there is nothing wrong" in two institutions — government and RBI — having conflicting opinions. "Now there are evolving opinions world over on the role of central bank. Reserve Bank in India has done a great job."
READ ALSO: India to implement US foreign tax compliance act, says RBI
Referring to public debt management, Jaitley said except for Russia, China and few countries, it has been entirely shifted to the government from the central bank. Even the Raghuram Rajan Committee had earlier said that there was a conflict of interest in RBI managing the government, he noted.