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Unrelenting in his pursuit of tax recovery in Vodafone-type deals, the Finance Minister, Mr Pranab Mukherjee today asserted that India cannot be allowed to become a tax haven just to attract foreign investments.
He expressed confidence that India will continue to attract foreign investments despite tough global economic conditions and eurozone crisis.
In his nearly two-hour long reply to the debate on Finance Bill in the lower house, Mr Mukherjee made it known that the Government was determined to go ahead with its planned retrospective amendments to the income tax law as part of its efforts to bring Vodafone-type offshore deals in the tax net.
“I would like to be guided either by a double tax avoidance agreement or domestic tax law. There cannot be a situation where somebody will make money on an asset located in India and will not pay tax either in India or to the country of its origin”, Mr Mukherjee said.
The Lok Sabha later passed the Finance Bill after Mr Mukherjee moved over 50 amendments including the ones for deferment of anti-tax avoidance rule implementation. This means that the tax demand notice served on Vodafone remains valid and now enjoys legal sanctity.
He also said that Parliament had the right to correct Supreme Court judgements and reeled out several instances where the legislature had gone in for clarificatory amendments to convey its intent. While Supreme Court can interpret the law, the legislature had the right to make its intention clear, Mr Mukherjee said.
It is estimated that the retrospective changes to the income tax law could yield as much as Rs 35,000-Rs 40,000 crore in tax revenues.
Making it clear that Vodafone was not off the hook, Mr Mukherjee said that India was not inferior to any other country in respect of having retrospective changes in tax laws. Referring specifically to UK (headquarters of Vodafone), he pointed out that the UK had also in 2008 gone in for retrospective changes with effect from 1987. “If they are entitled, surely India is entitled. We have the right,” he asserted.
Responding to BJP Leader Mr L.K.Advani’s query on the white paper on black money, Mr Mukherjee said that the white paper will be tabled in Parliament in the current session itself (before May 22). He however made it clear that names of Indians who have stashed black money in banks abroad can be disclosed only when prosecution has been launched against them.
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