Asserting that India is sending the right messages on its non—adversarial tax policy, a senior government official today said there are some “legacies of the past” that are posing challenges.
“I think the government has sent all right messages as far as consistency, predictability and clarity of tax policy are concerned.”
“It (government) has not appealed against Vodafone (tax) case, which very few government would have done. And I see the tax department far more friendlier than it was in the past,” said the Secretary, Department of Industrial Policy and Promotion (DIPP) Amitabh Kant during a session at India Today Conclave here.
However, he said that there are some challenges which are legacies of the past. There are issues related with taxation and India needs consistency and predictability of policy.
In January, the government had said that it would not appeal against a Bombay High Court ruling that Vodafone was not liable to pay tax demand of Rs 3,200 crore in a transfer pricing case.
The decision of not filing an appeal in the Vodafone case was taken at the highest level following advice by Attorney General Mukul Rohatgi.
The tax authority had issued a showcause notice to Vodafone India on January 17, 2014 and later passed an order asking it to pay additional Rs 3,200—crore tax for allegedly undervaluing the shares of its Pune BPO.
Later on Vodafone moved the High Court challenging the I—T order and contended that its transaction on transfer of shares was not taxable under the Indian tax laws.
In its ruling, the Bombay High Court had said “in our opinion there is no taxable income on share premium received on the issue of shares.”
Kant said it is important that India grows at a rapid rate and it is very important that government makes this country a very easy place to do business.
“In the last 7—8 months we have scrapped a number of process, licensing rules, paperwork and other rules. We have integrated and converged several departments.
“We opened up the FDI (Foreign Direct Investment) regime across sectors — defence, construction, railways, insurance, medical devices one after another,” he added.
India today is one of the most open economies of the world as far as the FDI is concerned. In the last 8—9 months FDI has grown about 36—37 per cent, he said further.
“India needs a very stable policy of land acquisition. You can blame this government for everything, but you can’t blame it at all for being intimidating. We have taken some very bold measures; we have even taken ordinances route. I think it has taken all the right moves, you just need to sustain it over a long time,” Kant said.