Taxation
Jaitley says 'no retro tax' as claim cases continue

The finance minister said the government had taken the position that in cases where the courts had given their verdict in favour of the companies, no appeal will be filed despite such an option existing

 

Even as court battles continue over tax demand on foreign firms on deals entered in India before the change in laws, Finance Minister Arun Jaitley has sought to clarify his stand of not pursuing retrospective taxes, but said some cases were different.
 
Speaking at the Peterson Institute for International Economics here on Thursday, the finance minister said the government had taken the position that in cases where the courts had given their verdict in favour of the companies, no appeal will be filed despite such an option existing.
 
"There are, however, two categories of cases still pending -- some under investment treaties are in arbitration, while some others where notices were issued earlier but the assessments are being completed now... they fall under one category and we are waiting for the judicial process (to get over)."
 
At the same time, alluding to the recent capital tax gains demand of Rs.40,000 crore from foreign funds, which again raised concern, Jaitley said these entities had, indeed, asked for a waiver stating that it was an unfair tax. But they lost the case in courts.
 
"So, for future I have abolished it (minimum alternate tax on capital gains) from April 1, 2015," he said, adding: "But their expectation that having lost the case the state must now intervene, that looks a little difficult from my point of view."
 
The finance minister, nevertheless, said such funds had the option to take their appeal to the courts. He also emphasised that Prime Minister Narendra Modi's government had stuck to its promise of not sending a single notice for a retrospective tax demand.
 
"Some of these contentious cases, in all honesty, have not given me a single rupee of revenue so far. They've only brought a bad name to me. And these are essentially because of old legacy issues," Jitley said.
 
Even as the finance minister was speaking, Cairn India was fighting a legal battle with the tax authorities in India, with its counsel, citing various judgments, telling Delhi High Court that the fresh tax demand of Rs.20.495 crore imposed on it was uncalled for.
 
The matter pertained to the purchase of India assets of Britain-based Cairn by the Vedanta Group in 2007. The Indian entity said tax matters must be raised within a reasonable time and that the present late demand was "unreasonable and atrocious".
 
Similarly, the government also decided to pursue a capital tax gains demand of Rs40,000 crore from foreign funds, a matter which the finance minister touched upon in the speech that was circulated by the Indian Embassy here -- the one from which he deviated.
 
"I'm acutely aware that there are concerns about retrospective taxation, tax harassment, the unpredictability and arbitrariness in our tax administration especially relating to transfer pricing," he said.
 
"Let me emphasise we are absolutely committed to a transparent and predictable tax regime. There will be no retrospective actions. We will see taxpayers as partners not as potential hostages," he said at the talk on "Tax reforms in India: Vision for the future".
 
"Let me also highlight actions that have not received sufficient attention. This year, two high court rulings went in favour of Vodafone and Shell that the government did not contest, reflecting our commitment to not being adversarial," he said.
 
Spelling out a tax vision for India at the leading think-tank on global economic issues, the finance minister said he believed that with the reforms underway in India, the country was well on its way to having one of the more modern tax systems in the world.
 
He spoke about the proposal for a pan-India goods and services tax and how it will create a single market in India, as also how the distinction between foreign portfolio and foreign investment was removed in a bid to simplify procedures.
 
He also said that moves were afoot for a moderate tax regime, that was fair and equitable.
 
"Currently we have in some ways the worst of both worlds: High marginal corporate taxes but low effective collection. We create the perception of a high-tax country and yet we do not collect commensurate taxes. We need to change this to promote investment and growth."

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India to grow at 7.5 percent in 2015: Moody's Analytics
According to the ratings agency, low inflation rate has enabled the Reserve Bank of India (RBI) to cut interest rates by 50 basis points in early 2015 which has helped in easing pressure on the private sector
 
A week after it revised its outlook on India to positive from stable, international credit rating major Moody's pegged India's growth at 7.5 percent for 2015.
 
"India's economy is on a cyclical upswing. Forward looking indicators suggest domestic demand is gathering momentum," said Faraz Syed, associate economist, Moody's Analytics. 
 
According to the ratings agency, low inflation rate has enabled the Reserve Bank of India (RBI) to cut interest rates by 50 basis points in early 2015 which has helped in easing pressure on the private sector. 
 
"Lower rates as well as the government's infrastructure and disinvestment programs should provide a boost to domestic-oriented industries," said Syed. 
 
The RBI had cut its repurchase rate by 25 basis points on January 15 and on March 4. 
 
However, RBI Governor Raghuram Rajan, who conducted the first bi-monthly review of the monetary policy for the current fiscal year on April 7, decided to retain the policy rates.
 
The RBI made it clear that it will cut interest rates further only if it sees more robust containment of prices and commercial banks lowering the cost of housing, auto and corporate loans.
 
"Since most banks didn't reduce their lending rates until recently, the full impact of the rate cuts will probably be felt in the second half of 2015. Thus, consumer spending likely will get a bigger boost later this year," Syed said.
 
Rajan has projected a 7.8 percent growth for the current fiscal year, subject to a normal monsoon.
 
The rating agency's analysis suggests that the country's first quarter GDP (gross domestic product) growth will be around 7.3 percent on a year-on-year basis.
 
The growth projections come soon after Moody's had revised India's sovereign ratings outlook to positive from stable. Another ratings agency Fitch had reaffirmed its stable outlook on India. 
 
The think-tank of rich nations, the Organisation for Economic Cooperation and Development (OECD), also endorsed high growth prospects for India. 
 
Similarly, the Asian Development Bank (ADB) has also projected the country's growth at 7.8 percent in 2015-16 and at 8.2 percent in 2016-17.
 
On April 14, the World Bank had forecast India's growth accelerating to 8 percent in the next fiscal.
 
The ratings agency further noted the government's disinvestment plans as being a significant instrument in raising funds for infrastructure creation. 
 
"Funds raised from disinvestments will be spent on developing India's ailing infrastructure. If revenues fall short, we expect the government to cut expenditure to meet its 3.9 percent deficit target for 2015-2016," Syed said.
 
"Lower government spending is a downside risk to our forecast over the coming year," Syed added.
 
For 2015-16 fiscal beginning April, the government has budgeted to collect Rs.69,500 crore through public sector disinvestment.
 
Recently, approximately 5 percent of the Rural Electrification Corp. was sold in early April. The share issue stood oversubscribed by 553 percent.
 
Moody's said that the India's current account deficit (CAD) is expected to remain steady in 2015 thanks to lower oil and gold prices. 
 
India's CAD came down to $8.2 billion -- or 1.6 percent of the gross domestic product -- in the third quarter ended December 2014.
 
With the steep fall in oil prices the subsidy burden has been projected to come down from a high of Rs.1.39 lakh crore for 2013-14 to around Rs.80,000 crore in 2014-15.
 

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Centre preparing vision document for NE hydrocarbon sector

Pradhan, who arrived in Assam on Tuesday on an official tour, visited oilfields and refineries in Assam, including the oilfields in Digboi, Duliajan, Nazira, the Numaligarh refinery and the Guwahati Refinery

 

Union Minister of State for Petroleum and Natural Gas Dharmendra Pradhan on Friday said the government is preparing a vision document for the hydrocarbon sector in India's northeast region.
 
The initiative has already been taken to boost investment in the sector in the region, he added.
 
Pradhan, who arrived in Assam on Tuesday on an official tour, visited oilfields and refineries in Assam, including the oilfields in Digboi, Duliajan, Nazira, the Numaligarh refinery and the Guwahati Refinery.
 
"Assam has, in fact, laid the foundation of hydrocarbon in the country and till today the 10 percent of the country's total gas and oil production is from Assam," the minister told reporters. 
 
"I have come here to review the overall scenario here so that the government can take up steps to boost the production in hydrocarbon sector in the region," he said.
 
Stating that Prime Minister Narendra Modi has fixed some target for the hydrocarbon sector in the region, Pradhan said: "At present our total import is 77 percent and he wants us to take up steps to reduce this outside dependency to 67 percent by 2022, when the country will celebrate its 75th Independence Day." 
 
"Considering the necessity of the hydrocarbon sector, the government has decided to set up a world class skill development centre to develop the skills relating to hydrocarbon sector," he said.
 
He also said the ministry had also instituted a high-level panel to prepare the vision document of hydrocarbon sector in the region within next three years.
 
This is for the first time that a petroleum minister has spent so many days in Assam in last several years, inspecting oil installations. 
 
Pradhan also met various heads of the oil companies, refineries and the state government, including Assam Chief Minister Tarun Gogoi.
 
He said that the much-hyped Brahmaputra Crackers and Polymer Limited (BCPL) is likely to be dedicated to the nation this year. "I am going to request the prime minister to come to Assam and dedicate the project to the people of the country."
 
On the issue of oil royalty, the minister justified Assam's demand for increase in the oil royalties, at par with the royalty given to Gujarat. 
 
"There were problems with the previous government in handling the issues. The Gujarat government had moved the Supreme Court over the issue of royalty and the court asked the oil companies to increase the royalty," he said. 
 
"We are working out on a solution that will benefit Assam," the minister added.

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COMMENTS

Gautam Hazarika

1 year ago

Center has already prepared the Vision Document it is available on web here is the link http://www.megplanning.gov.in/circular/H...

Gautam Hazarika

1 year ago

Center has already prepared the Vision Document it is available on web here is the link http://www.megplanning.gov.in/circular/H...

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