India not a tax haven: FM

Jaitley denies tax terrorism in India; says taxes due must be paid

Finance minister Arun Jaitley asserted on Monday that India does not support tax terrorism but it is not a tax haven either.

He said that taxes which are payable must be paid and should not be perceived as tax terrorism. Mr Jaitley was countering charges levelled by a section of foreign investors (FIIs) who have been asked to cough up reportedly $5-6 billion for ‘untaxed gains’ made in the Indian markets over the past years.

Income Tax department has imposed 20 per cent Minimum Alternate Tax (MAT) on capital gains made by FIIs. Mr Jaitley in his budget had proposed to scrap MAT on capital gains made by FIIs. But the government has pointed out that the decision will take effect on 1 April 2015 and past taxes have to be paid.

Infact, revenue secretary Shaktikanta Das said on Monday that what Foreign Institutional Investors (FIIs) and FPIs are asking “is retrospective exemption”.

“India is not so vulnerable that every legitimate tax demand is considered as tax terrorism... We are not a tax haven and we don’t intend to be one,” Mr Jaitley said while addressing CII’s annual general meeting. The finance minister pointed out that taxes which are not payable, must not be paid and they should be challenged.

He said that some decisions of the past have made the taxation regime adversarial and an emerging economy that expects investment, cannot indulge “in what has been referred to as tax terrorism or very aggres- sive tax laws. But our fairness has been fairly misunderstood. The converse of tax terrorism is not a tax haven. If I read the front page of some newspapers, it is the impression that I get,” he said.

Mr Das said that some Foreign Portfolio Investors (FPIs) and Foreign Institutional Investors had gone to the Authority of Advance Ruling which ruled that MAT was applicable. The amendment, which has been proposed will take prospective effect on or after April 1, 2015. So, there will be no Minimum Alternate Taxon the FIIs or FPIs.

Foreign Institutional Investors have been reportedly asked to pay $5-$6 billion for ‘untaxed gains’ made in the Indian markets over the past years.

— PTI Union finance minister Arun Jaitley (right) with CII president Ajay Shriram (centre) and Bajaj Auto chairman Rahul Bajaj (left) during the CII’s National Conference and Annual Session 2015 “Building India: A Shared Responsibility” in New Delhi on Monday.