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Finance Minister Arun Jaitley has assured investors in the US over their apprehensions on retrospective amendments to the Income Tax Act. He said barring a few, most such disputes had been put to rest.
In Washington to attend the spring meetings of the International Monetary Fund and the World Bank, the finance minister, however, said a permanent law to deprive Parliament to legislate retrospectively wasn’t possible.
According to a Press Trust of India report, Jaitley was asked, “What would you say to an investor who says, ‘I can trust you, Mr Jaitley, I can trust this government. But as long as that law remains on the books, how can I be sure that in seven or eight or 10 or 12 years, it will not be misused by another government that does not share your intentions’?”
In response, Jaitley said, “I can’t override parliamentary sovereignty. I can’t bring a law that says Indian Parliament loses its right to ever enact a law retrospectively. Even if I did that, it would be illegal. Every legislature has that power.”
He, however, added as India’s experience of the 2012 retrospective amendments to the I-T Act had been adverse, if any government embarked on such a misadventure, the costs involved would be heavy. “So, any future Parliament or future government would have that power, but we’ve been doing our bit in restating and re-emphasising that it was not a sensible decision. I think the dangers of that retrospective legislation and the context in which it was brought have been driven home,” he said.
Currently, tax authorities are engaged in a legal battle with Vodafone over a tax dispute. Though the company had won the case in the Supreme Court, the government brought in retrospective amendments to the Income Tax Act. Another case pertains to tax demand over Cairn group re-organisation.
“Barring a case that is pending under that law or another case that has arisen now, I think we’ve already put most issues to rest, as far as retrospective legislation is concerned,” Jaitley said.
The government has set up a Central Board of Taxes (CBDT) committee, whose consent is necessary for any fresh case arising out of the retrospective amendment to the Income Tax Act that leads to a fresh tax liability on a company.
In an address at the Peterson Institute for International Economics earlier, Jaitley said he was “acutely aware” that there were concerns about retrospective taxation, tax harassment and arbitrariness in tax administration.
He also said the government did not contest high court orders in favour of Vodafone and Shell. This, he said, reflected the government’s commitment to not being adversarial. This Vodafone case pertains to share transfer within the group. After the Bombay High Court ruled in favour of the company, the Cabinet decided not to appeal against the order. The CBDT has asked its officials not to send notices in similar cases.
FinMin to review, simplify new I-T forms
Facing criticism over the new income tax (I-T) return forms, the finance ministry has said it will simplify these. “The finance minister spoke to me from Washington. I-T forms being reviewed…will be simplified,” Revenue Secretary Shaktikanta Das tweeted. Commerce and Industry Minister Nirmala Sitharaman said, “FM Arun Jaitley responds to the issue of I-T returns…shall review the additional I-T requirements…aim to simplify the process.” The new I-T forms seek increased disclosure of foreign assets — financial and physical — income generated through foreign assets, and the beneficiaries and beneficial owners of these assets. Disclosures have been enhanced for both foreign and domestic assets. For domestic disclosures, the new tax forms will seek information about the capital gains accrued through trading, with a detailed break-up of the long-term and short-term capital gains and the rate at which they are being taxed.
