Pranab Mukherjee with IMF chief Christine Lagarde in Washington DC on Friday. (PTI)
Washington, April 21 (PTI): Finance minister Pranab Mukherjee today said the proposed changes in the income tax act to bring into the tax net Vodafone-type deals were only clarificatory in nature and the government was ready to listen to the concerns of the business community over the amendment.
“There is some sense of despondency amongst a section of US businessmen, particularly because of their apprehension — and I would say misapprehension — about certain legislative amendments which we have proposed…Our policies are transparent … Whenever there is any misapprehension, we are ready to listen to them and readjust it when it is necessary,” Mukherjee said.
The issue pertains to the proposed amendment to the income tax act with retrospective effect, which would bring Vodafone-type deals under tax net and the UK-based telecom firm would be liable to pay Rs 11,000 crore tax for its acquisition of Hutchison’s stake in Hutchison Essar Ltd in May 2007.
Mukherjee said the amendments proposed were mainly clarificatory in nature and not a substantial change and the tax regime in India was stable.
“We do not have any fixed mind with respect to a particular issue, but what is to be done has to be done within the legal system and framework,” he said.
Several global bodies have written letters to Prime Minister Manmohan Singh and other ministers saying that the government’s proposal to amend the income tax act would hurt foreign investment.
Mukherjee said there was no uncertainty in the income tax laws and that India would be transparent and open to discussions with those who have complaints about the law.
“One question comes to mind that when you are giving retrospective effect to the law from the date of enactment of the Income Tax Act, 1962, can income tax cases be opened since 1962? The answer is no.”
“There are other provisions in the income tax act itself, according to which no case can be reopened, which is more than six years old,” he said.
Mukherjee was addressing concerns expressed in the US by the business community and also treasury secretary Timothy Geithner that the proposed amendment to the income tax act to reopen the Vodafone case would affect investments flowing into India.
“From all these stand points, India is a good investment destination, so there should not be any apprehension,” Mukherjee said.
The Group of 20 nations on Friday pledged $430 billion in new funding to the International Monetary Fund, more than doubling its lending power in a bid to protect the global economy from the Eurozone debt crisis.