Asserting that a lot more needs to be done to improve the ease of doing business in the country, Assocham President Sunil Kanoria today said there is "complete trust deficit" among bureaucrats towards businesses on tax issues.
Urging the government to simplify tax administration, he said: "A lot more needs to be done especially on the tax side. Tax is becoming a challenge. Ministries, bureaucrats are still not easing out...In terms of tax administration and making it more simpler."
A lot more needs to be done, Kanoria told PTI.
"(It is) the mindset change of bureaucrats of having trust in business. There is a complete trust deficit," he said.
His comments follow the Income Tax department issuing a reminder notice to Vodafone over its Rs 14,200 crore tax dues, a move which the UK firm said shows disconnect with Prime Minister Narendra Modi's promise of a tax-friendly environment.
The government, on the other hand, defended its decision saying that the step is a routine exercise.
On mounting non-performing assets (NPAs) or bad loans of the state-owned banks, Kanoria said they are set to rise significantly in the ongoing January-March quarter.
"To my mind, what we are seeing now in the December results of banks is only a curtain raiser. We will see a lot more in March (quarter results)," he said.
Asked if he expects bad loans to rise, Kanoria said: "Ya. It has to. Quantum I don't know, but it will be pretty large because the approach is that you cut and clean up".
On whether he was in favour of change in criteria for classifying loans as NPAs, the Assocham President said: "Absolutely. At this juncture when there is a systemic problem you need to look at how to assess that and bankers will have to differentiate between genuine problems and people who have done it in a wrong manner."
Kanoria said he met RBI Governor Raghuram Rajan and Finance Minister Arun Jaitley recently to share his concerns on the bad loans of lenders.
"Basically their perspective is they want the banks to clean up. So that will have a negative impact on the economy".
Earlier this week, RBI Governor Raghuram Rajan said he was not in favour of stretching norms for non-performing assets (NPAs) or bad loans as investors will not get the true state of balance sheets.
He said it is useful to keep the NPA norms constant and by changing the definition of bad loans will only "dilute and obscure account".
Asked whether this approach of wanting the banks to clean up was about the government washing its hands off, Kanoria replied: "Absolutely. That is what my concern is."
Major state-owned banks in the country including SBI have been reeling under NPAs leading to erosion of profits on account of higher provisioning for bad loans in the third quarter of the current fiscal.
