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TAX TERRORISM

The NDA Government is saying that there will be no tax terrorism. It will not resort to fresh retrospective tax. but the old burden remains. The latest notices  against Cairn Energy for Rs. 29,000 crore sent this week and the one against Vodafone for Rs.14,000crore sent in February show that the spectre of tax terrorism has not been buried. In his budget speech ArunJaitley said that pending cases would be settled soon. He proposed a one time scheme of dispute resolution for all past cases. That should improve the investment climate in the country and help implementation of the retrospective amendment. According to Jaitley’s proposal, companies can settle their cases by paying only tax arrears and get a waiver of both interest and penalty provided they withdrew from all arbitration with the Government. The two companies so far hit are Cairn Energy and Vodafone.

In the case of Cairn, Rs.10,200crore is the tax liability. Interest and penaltyamounttoRs. 18,800 crore.

The problem with Cairn and Vodafone is that the proposed scheme has not yet taken effect. Do global investors still see India as an ideal investment destination? The certainty of the tax regime assured by the NDA Government is a plus factor. But the notices served on Cairn and Vodafone are discouraging besides the slump across the globe.

 

 

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