Jaitley slams ‘unsustainable’ taxes

Government can handle political risks of reforms, says the Finance Minister

November 21, 2014 11:22 pm | Updated November 17, 2021 12:05 am IST - New Delhi:

New Delhi:  Finance Minister Arun Jaitley during the Annual Conference of Chief Commissioners and Director Generals of Customs, Central Excise and Service Tax , in New Delhi on Monday. PTI Photo by Manvender Vashist(PTI8_11_2014_000023A)

New Delhi: Finance Minister Arun Jaitley during the Annual Conference of Chief Commissioners and Director Generals of Customs, Central Excise and Service Tax , in New Delhi on Monday. PTI Photo by Manvender Vashist(PTI8_11_2014_000023A)

Finance Minister Arun Jaitley on Friday said that an unsustainable tax demand would only earn the country a bad name as an investment destination. The Minister’s comments come in the wake of the Income Tax department losing its battle against Shell in Mumbai High Court.

“Unsustainable demand won’t get you taxes. Unsustainable demands in the books can show you in good glory, but eventually those taxes will be blocked in some judicial court proceedings...they would have only earned us a bad name as an investment destination,” Mr Jaitley said at the HT Leadership Summit. He, however, maintained that those who are supposed to pay taxes must pay.

Mr Jaitley’s comments come in the wake of Mumbai High Court order earlier this week wherein Income Tax Department lost its Rs 18,000 crore transfer pricing cases against oil major Shell India. The government is also engaged in a Rs 20,000 crore tax dispute with British telecom major Vodafone.

Referring to retrospective amendments to the tax laws by the UPA government, Mr Jaitley said, if the government was not investor friendly, people would start looking elsewhere. He further said making the taxation regime investor-friendly and streamlining the procedure for land acquisition were the big challenges facing the government.

The Minister, however, took comfort from the fact that taxation laws were the domain of the Lok Sabha in which the NDA has majority.

He said though the government had managed to get the mess concerning allocation of coal blocks cleared with ease, resolving other issues remained a challenge. When asked the three specific reforms he would like to get passed in the ensuing Winter session of Parliament, Mr Jaitley said he would like the insurance Bill, coal laws and Goods and Services tax to be cleared. He said there were political risks to reforms.

“Reforms alone by themselves are not enough, if they have to survive politically, the blending [with politics] has to be adequately done by those involved, Mr. Jaitley said.

"Govt can handle political risks of reforms"

When asked about the three specific reforms he would like to get passed in the ensuing Winter session of Parliament, Union Finance Minister Arun Jaitley said he would like the insurance Bill, coal laws and Goods and Services tax (GST) to be cleared.

Speaking at the HT Leadership Summit, the Minister said there were political risks to reforms and those in government would have to adequately blend the economic reforms with politics.

“Economic reforms have also to be blended with competent and clever politics. Reforms alone by themselves are not enough, if they have to survive politically, the blending has to be adequately done by those involved. And I am sure it is one area both my party and government is paying adequate attention,” Mr Jaitley said.

“Undoing a lot of taxation decisions is quite challenging, but that necessarily does not involve a legislative action. Only some areas require action,” he told the gathering.

He said though the government had managed to get the mess concerning allocation of coal blocks cleared with ease, resolving other issues remained a challenge.

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