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Deputy Chairman of the Planning Commission Montek Singh Ahluwalia has called for for the complete acceptance of the Shome Committee’s recommendations on Retrospective Amendments in the Income Tax Act.
This taxation provision is mainly related to the Vodafone case.
Finance Minister P. Chidambaram, in an interview to a television channel , said “What Shome said is as far as possible, the Government should not make retrospective legislation. It becomes necessary to make a retrospective legislation than collect the tax alone, and waive the penalty and interest. That is an unexceptional principle. But today, there is no pressing need for me to move the amendment, that amendment can be moved only after we resolve the Vodafone issue which gave rise to this controversy.”
The Shome panel’s suggestions include prospective taxation on gain from indirect transfer and tax those who earn capital gain from such transfer. It may be recalled that the 2012-13 Budget included provision related to retrospective tax.
But after foreign investors and Indian corporates expressed their unhappiness, the Government included this provision in the terms of reference for Shome Panel on General Anti Avoidance Rules (GAAR).
Markets were disappointed on Thursday when Chidambaram did not make any announcement on the retrospective tax amendments.
In an interaction with reporters on Friday, Montek hoped for a positive outcome when the Finance Minister replies to the debate on the Finance Bill.
Terming this as his personal opinion, he said, “We should accept Shome Committee’s report 100 per cent and not even 95 per cent.”
Talking about General Anti Avoidance Rules (GAAR), he said that action on GAAR is extremely supportive.
These tax provisions, also introduced last year, have been postponed till 2016.
“It said that look if you have faith in the Indian economy, we are postponing GAAR and you can happily carry on doing whatever you have been doing and don’t worry too much about these things. I think, within the rules for GAAR, it has also been made much clear in favour of foreign investors,” he added.
Talking about growth, he said that the potential growth rate for the economy is between 7-7.5 per cent.
“Our growth rate came down from eight to five per cent not just because of global problems but also because of some of our domestic problems like delay in giving project clearance. We need to fix them,” he said.
> shishir.sinha@thehindu.co.in
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