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May 09, 2012, 09.08 AM IST
The one year-deferral of GAAR is not on account of any fear or apprehension, asserted finance minister Pranab Mukherjee and warned that India cannot become tax havens just to attract foreign investors. The 30-minute long speech while presenting the finance bill veered around tax direction, crude prices and urgent fiscal action.
Also Read: Fuel price hike on cards The Lok Sabha today passed the finance bill 2012 with amendments. In a strong message to Parliament, the finance minister today defended the amendments to IT act. He said the Supreme Court may interpret the law, but the parliament can amend the law. The finance minister said India is not an imperial country and reminded the House that UK made exactly same retro amendment. "We cannot have a situation where a company doe not pay anywhere on huge capital gains. Either pay tax here on in your country,” he said. He also assured to sort out states CST claims but linked it to progress on GST. Meanwhile he called for a 3-pronged approach to deal with high crude prices. According to the government's estimates, FY12 current account deficit is seen at 4.0% of GDP. He stressed that the Budget aim of capping subsidy at 2% of GDP is not a ‘pipe dream’. Economic reforms Agreeing that confidence in economy will return once key bills are passed, the FM said the government will introduce strong measures to bring it back to recovery path. "Economic mood will change with tax reform and finance bill passage. We need to be extremely careful of short-term external debt and FIIs will support to fund current account deficit," he added. The FM is confident though high current account deficit is a matter of concern but it can be overcome. Regarding the much-awaiting GST, Mukherjee ensured that tax compliance will improve with introduction of DTC and GST. However, the government will allot money to states on CSTonly post progress on GST. He is also assured that the pending DTC can be passed in the monsoon session. Oil prices Concerned over growing oil prices, the FM said the government will address issue of under-recoveries of OMCs. However, fuel price hikes would add to inflationary pressures. He is worried that oil price may rise to USD 150 per barrel. Mukherjee elaborated that the centre can not fully compensate oil companies revenue losses so that the states also should work together on oil taxes.
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