Seeking to reassure foreign investors, Finance Minister Arun Jaitley has ruled out any new retrospective taxation by the Narendra Modi Government, but made it clear that one or two earlier cases locked in court battles will be left to be determined by the judicial process. Pointing to the recent issue involving a demand of Rs40,000 crore by way of minimum alternate tax on capital gains from some Foreign Institutional Investors (FII), Jaitley pointed out that these FIIs had opted to take the matter to a judicial tribunal where they lost the case.
Jaitley, speaking at the Peterson Institute for International Economics here on Thursday, dwelt at length on Centre’s broader approach to taxation matters, asserting: “We are well on our way to having one of the more modern tax systems in the world.” Efforts are under way to make the tax department form something perceived as highly adversarial to one that is friendly to assess through a process of rationalisation, he said. On the ticklish issue of retrospective taxation resorted to by the UPA Government that rang alarm bells through corporate boardrooms in India and abroad at the time, Jaitley said the BJP had all along opposed it and made clear it will never employ such an instrument.