Close on the heels of the Income Tax Department losing its Rs18,000 crore transfer pricing cases against oil major Shell India, Finance Minister Arun Jaitley on Friday noted that an unsustainable tax demand would only earn the country a bad name as an investment destination.
“Unsustainable demand won’t get you taxes. Unsustainable demands in the books can show you in good glory, but eventually those taxes will be blocked in some judicial court proceedings...They would have only earned us a bad name as an investment destination,” he said at the HT leadership Summit.
He, however, maintained that those who are supposed to pay taxes must pay.
Jaitley’s comments come in the wake of a Mumbai High Court order earlier this week wherein Income-Tax Department lost its Rs18,000-crore transfer pricing cases against oil major Shell India.
Already the Government is engaged in a Rs20,000 crore tax dispute with British telecom major Vodafone.
Referring to retrospective amendments to the tax laws by the UPA Government, Jaitley said, if it is not investor friendly, people would start looking elsewhere.
He further said making taxation regime investor friendly and streamlining the procedure for land acquisition are the big challenges facing the Government.
“Undoing a lot of taxation decisions is quite challenging, but that necessarily does not involve a legislative action. Only some areas require action,” he told the gathering.
Jaitley, however, took comfort from the fact that taxation laws are the domain of the lok Sabha in which the NDA has majority.
The Minister said though it managed to get the mess concerning allocation of coal blocks cleared with ease, resolving other issues remain a challenge.
When asked the three specific reforms he would like to get passed in the ensuing Winter session of Parliament, Jaitley said he would like insurance, coal laws and Goods and Services tax (GST) to be cleared.
He said there are political risks to reforms and those in government would have to adequately blend the economic reforms with politics.
“Economic reforms have also to be blended with competent and clever politics. Reforms alone by themselves are not enough, if they have to survive politically, the blending has to be adequately done by those involved. And I am sure it is one area both my party and Government is paying adequate attention,” Jaitley said.
On black money in the country, he said, real estate, jewellery market, luxury market and mining are the sectors in which they are prevalent. The Minister said he has asked the chief commissioners of direct taxes to look into these sectors.
As regards black money stashed abroad, he said his Government would follow legally the right course.
“If you make an adventurist step and make every name available, without any supporting evidence, breach your international treaties, you are not going to be only disadvantaged by future non-cooperation, but also nobody will want to provide you with supporting evidence,” he said.