Washington, Apr 21: Seeking to allay apprehensions on the proposed retrospective tax amendment, Finance Minister Pranab Mukherjee today said India is ready to address concerns of the American businesses within its legal framework.
“Our policies are transparent ... whenever there is any misapprehension, we are ready to listen to then and readjust it when it is necessary.
“Therefore, we are not having any fixed mind with respect to a particular issue, but what is to be done has to be done within the legal system and legal framework,” he said at a think-tank here responding to the concerns of the US industry.
“They (US businesses) have some doubt whether the tax regime in India is stable or not. It is stable.
Even the current amendment, which is being debated, I have explained it that the nature of the amendment, which I have introduced, is of clarificative nature and not substantive amendments in the contents of the law,” he said.
“One question comes to the mind that when you are giving retrospective effect to the law from the date of enactment of the Income Tax Act, 1962, can the income tax cases be opened since 1962, the answer is no.
“Because 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.
“Therefore, there is no uncertainty and attempt is being made to give certainty... Secondly the investment decision is not taken merely whether there is tax concession or not.” He was answering questions at the Peter G Peterson Institute for International Economics, which had organised an event jointly with the Confederation of Indian Industry (CII).
Mukherjee was addressing concerns expressed in the US, including by Treasury Secretary Timothy Geithner, that the proposed amendment to the IT Act to reopen the Vodafone case has dampened enthusiasm over investment in India.
But, he said, before readjusting decisions the government must be convinced on the necessity of such a change. Responding to question, he said the current sense if “despondency” is mainly because of their “misapprehension”. There are 10 legislative amendments, he has proposed in his budget, he said.
“What is the size of the market? Whether there are systems which are transparent and tested and thirdly what the purchasing power of the people there is. “From all these stand points, India is a good investment destination, so therefore there should not be any apprehension,” Mukherjee said.
Mukherjee said the relationship between the two countries is expanding and is very much on the right track. It is all comprehensive. Hardly there is any area where there is no interaction with the US.
“In all area, our strategic partnership is becoming comprehensive. Therefore I do feel that in coming years our relationship would move from strength to strength,” he said. “Our strategic global partnership with the United States is truly transformational in nature.
We are not only discussing issues such as strategic cooperation, counter-terrorism, defense, high technology, civil nuclear and space sector cooperation but also a broad range of development issues that directly and positively impact our citizens,” he said in his remarks earlier.
Mukherjee announced that the India-US Economic dialogue would be held in June this year. During his meeting with Geithner, he extended the invitation to the latter to come to New Delhi.