 "Rani Singh Nair")
Multinational companies Vodafone and Cairn have not yet responded to a government’s scheme to settle retrospective taxation cases, said Rani Singh Nair, chairperson, Central Board of Direct Taxes, pointing out that it was a voluntary scheme to get immunity from penalty. In her first interview since taking charge, Nair told Dilasha Seth that the department was hopeful of meeting the direct tax collection target this year. She added that the weak corporation tax collection growth of less than two per cent so far could be on account of companies being unsure of their earnings at this stage. Edited excerpts:
Will the CBDT meet its tax collection target?
Collections are doing well. Till August 15 we had collections of Rs 1,89,803 crore, which is 21.8 per cent growth, year-on year. The growth in corporation tax was 1.93 per cent. And income tax grew 42.14 per cent. We are hopeful of meeting the target this year.
Corporation tax collections are unusually weak…
Only the first instalment of advance corporate tax has come in. The second instalment is due in September. It is early to say whether companies are doing well or not. Collection will be better projected after the second and third instalments.
What revenue do you expect from the income disclosure scheme?
When the Budget estimates were made, the scheme was not factored in, so whatever comes in will be a bonanza. People will avail the scheme because there is clarity about the subject now. We will release more FAQs (frequently asked questions) on valuation and payment of taxes.
What is the response to the dispute resolution scheme?
Many people will come forward because it is ultimately saying one can just pay the tax and the interest instead of going into appeal. For many people, it is a clean way of closure.
What are the concerns over the scheme?
People by and large want clarity on disclosure, whether they can do part disclosure or full. We started with CIT appeal, since that is where the bulk of appeals are. But, if the scheme is acceptable, we can look beyond. We are allowing appeals to be withdrawn till the high court level. It is about reducing litigation. This will encourage compliance.
At what stage are investigations into the Panama Papers?
Enquiries are on. Once the information is in, it will be put in the public domain. A multi-departmental committee has been set up and is looking into this. There is no deadline for the committee to submit its report.
Vodafone and Cairn do not seem to be interested in the government’s offer for settlement...
They have not come to us as yet. Dialogue is happening, but then someone has to come to you to avail the benefits of the scheme. Since the matter is under arbitration, it is not appropriate to comment more.
Cairn has raised a $5.6 billion compensation demand over the retrospective tax demand...
That is their decision. They can get what is giveable under law. How can they ask for compensation?
Can the case be withdrawn from international courts?
The case can be withdrawn mutually. But dispute resolution for retrospective tax cases is also voluntary. You receive immunity from penalty.
Will the government offer sweeteners to Vodafone and Cairn?
There has been no demand. If the demand arises, we can always examine it.
Is the double taxation avoidance agreement with Singapore being renegotiated? Will it have the same transitional benefit as the one with Mauritius?
The Singapore treaty is connected to the Mauritius protocol. Since that has been amended, the treaty with Singapore is also being renegotiated. So far as transitional benefits are concerned, let us see what emerges from negotiation.
How will Project Insight facilitate efforts to unearth black money?
We receive a lot of information through annual information returns and third-party reporting. Since it is is not possible to look into all this information, we have Project Insight for data mining.
The scheme for undisclosed assets overseas was not very successful…
The Black Money Act gave people a chance to declare undisclosed assets. Even today people are saying can we have a second compliance window, especially after the Panama Papers. Instead of taking harsh measures, we are asking taxpayers to become compliant. We hope more people will buy peace of mind.
There are concerns over general anti-avoidance rule (GAAR), particularly over retrospective provisions in tax treatment of compulsory convertible preference shares...
We have set up a committee under the chief commissioner of international tax to look into the concerns. We have put all GAAR proposals in the last two years in the public domain. The department has had a public dialogue with all stakeholders in GAAR. We are trying to address genuine concerns.
What is the department’s view on the demand by HSBC account holders for cross-examination?
They want to see the original documents and cross-examine. We will examine that demand. Let us see how this pans out.
