Finance minister Arun Jaitley on Friday said that an unsustainable tax demand would only earn the country a bad name as an investment destination, comments that come in the wake of tax department losing its battle against Shell in Bombay High Court. “Unsustainable dem-and won’t get you taxes. Unsustainable demands in the books can show you in good glory, but eventually those taxes will be blocked in some judicial court proceedings...they would have only earned us a bad name as an investment destination,” he said at a summit. He, however, maintained that those who are supposed to pay taxes must pay.
Mr Jaitley’s comments come in the wake of Mumbai High Court order earlier this week wherein Income-Tax department lost its `18,000-crore transfer pricing cases against oil major Shell India.Already the government is engaged in a `20,000 crore tax dispute with British telecom major Vodafone. Referring to retrospective amendments to the tax laws by the UPA government, Mr Jaitley said, if it is not investor friendly, people would start looking elsewhere.
He further said making taxation regime investor friendly and streamlining the procedure for land acquisition are the big challenges facing the government. “Undoing a lot of taxation decisions is quite challenging, but that necessarily does not involve a legislative action. Only some areas require action,” he told the gathering. When asked the three specific reforms he would like to get passed in the ensuing Winter session of Parliament, Mr Jaitley said he would like insurance, coal laws and GST to be cleared. He said there are political risks to reforms and those in government would have to adequately blend the economic reforms with politics.
On black money in the country, he said, real estate, jewellery market, luxury market and mining are the sectors in which they are prevalent. The minister said he has asked the chief commissioners of direct taxes to look into these sectors. As regards black money stashed abroad, he said his government would follow legally the right course.
On privatisation, he said, principally he has always been for privatisation in sectors where government can get out.
He also said government would be able to meet the direct tax target, though indirect tax remains a “challenge” as manufacturing sector was a source of worry.
Mr Jaitley also expressed concern over banks become defensive in lending in the wake of high stressed assets. He said the NPAs had come down to 2 per cent of total advances after implementation of SARFAESI Act, but have now again risen to 5 per cent. Referring to the land acquisition bill, Mr Jaitley said, the NDA government did not have any problem in farmers getting higher compensation but the real issue was procedure.