Moneycontrol Bureau
Finance Minister Arun Jaitley Monday said India was no so vulnerable that every legitimate tax demand will be waived.
Tax authorities are said to have served notices to foreign institutional investors over unpaid Minimum Alternative Tax (MAT) of the previous years, triggering protests from the overseas investors.
Jaitley said India was not a tax haven and that taxes that were payable by foreign investors should be paid, and others could be challenged.
FIIs will not have to pay MAT on their gains this financial year onwards as announced in the Budget, but there is ambiguity on whether FIIs are liable to pay MAT on the gains of the previous years.
Estimates of the aggregate MAT to be paid by FIIs vary between USD 5-8 billion, according to media reports.
On the subject of black money stashed abroad, Jaitley said there would be a grace period for companies and individuals to come clean on their overseas assets.
“All suggestions regarding the compliance window (for black money) are welcome. But after that, remember globally also the regime is becoming very challenging,” Jaitley said.
“Over the next 2-3 years, the G-20 initiative for automatic exchange of information will take shape. India has decided to become a signatory to the US law of FATCA. After that other countries would also be discharging their obligations to each other.
Rather than wait to run into trouble and then say that targeting undisclosed income or assets abroad is terrorism, it is in everybody’s interest that the rule of law is complied with. Therefore a reasonable window of compliance would come,” Jaitley said.
The Finance Minister said that for those who have indulged in misadventures in the past, going forward a 25 percent taxation regime in India would be preferable compared to the risks abroad because of stringent tax rules.
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