Millennium Post

‘Unsustainable tax demand earns country a bad name’

Finance Minister Arun Jaitley on Friday said that an unsustainable tax demand would only earn the country a bad name as an investment destination, comments that come in the wake of tax department losing its battle against Shell in Mumbai High Court. ‘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 Mumbai High Court order earlier this week wherein Income-Tax Department lost its Rs 18,000-crore transfer pricing cases against oil major Shell India. Already the government is engaged in a Rs 20,000 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. He said there are political risks to reforms and those in government would have to adequately blend the economic reforms with politics.
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