HONG KONG: Promising a simple and globally competitive tax regime, Finance Minister Arun Jaitley today said the government is confident of the new GST regime to roll out from the next fiscal and expressed confidence about an early resolution of pending disputes on direct taxes front.
While expressing confidence that GST would be passed in the Rajya Sabha as well in the next session, he said it's not necessary to implement it from April 1, 2016, itself as it is a transactional tax and can come into effect from the first date of any other month as well.
"The Congress party is trying to delay the new tax, but you must remember, it is a transactional tax and not an income tax.
"So, it can come up on the first of any month. Delay from April 1 does not mean that it will go to April 1 of the next year. That only happens in income tax," Jaitley said here at a press conference on the last day of his four-day visit to Singapore and Hong Kong.
On direct taxes and the pending disputes regarding some foreign companies, including Vodafone, Jaitley said most of the past issues have been resolved either by expeditious judicial adjudication process or by asking expert panels.
"I cant tell you the exact process that we will follow, but my objective is to have a resolution."
Promising an easy tax regime, he also dismissed the suggestions that the government has been trying to resolve this issue for a long time, but has not been able to do so.
"For the future, retrospective is over. MAT is over. Transfer pricing has been resolved. It is not that we have been only talking about these things, we have been acting on it," he said.
On the government's failure to get the controversial land law amended, Jaitley said, "Land is a concurrent subject and therefore, states have now said they want to bring changes after getting them approved by the Centre. We have agreed to that. This is an easier course."
On investors demanding labour reforms and whether there are difficulties on that front, Jaitley said, "We have amended some labour laws. The states have also amended some labour laws.
"There are many areas where some changes are taking place on their own because of technology, such as in banking. As and when it is necessary, we consult the unions, we consult the states and then the changes are made. It is not the case that nothing has been done."
On impact from Chinese slowdown, he said, "Of course, it will impact the stock markets. Any change in Chinese currency will impact the currency market.
"That apart, there are some good reasons why India does not get impacted adversely. China's entire production or supply chain. we are not any significant partner there. Second, the impact of oil and commodities goes to our advantage. Third, investors would have to look elsewhere also and there we have the best opportunity."
He also said Chinese investments are very much welcome in India.
"We welcome them and they have invested in many sectors, including in infrastructure. They are setting up telecom equipment facilities," he added.
He also said the rupee has performed much better than most global currencies.
"The rupee was the only one to withstand the pressure from a strong dollar. It is only after devaluation in China it suffered for some period. Let's wait and watch. In the last few days, it came back again," he added.
Jaitley also said it was the decision of the U.S. Federal Reserve whether and when to hike rates, but speculation continues on that front for now.
Earlier at the APIC-India Capital Markets and Institutional Investors Summit, Jaitley said, "Putting the pending tax issues to rest so that we can have a simplified tax structure is also certainly a high priority."
The Finance Minister also said India's taxation structure itself had raised a lot of grievances and complaints. "Therefore, we have a large number of proposals as far as taxation reforms are concerned. On direct taxes, I have announced a road map to bring it down to 25 percent over the next four years," he added.
Many of the exemptions, Jaitley said, will be phased out to simplify the structure while there will be no retrospective taxes "as far as this government is concerned".
"No fresh notices will be issued on the basis of retrospective laws brought by the previous government, and therefore, some disputes which had almost become symbolic of India's complicated tax structure, we are gradually trying to resolve each one of them," the Finance Minister said.
According to him, Goods and Services Tax (GST) obviously remains the key priority as far as he is concerned.
"One of the most significant reforms, which I personally would have liked to have moved a bit by now, but is held up essentially because of political considerations, is GST. This is one of the most important taxation reforms in independent India," Jaitley said.
Elaborating on indirect tax reforms, Jaitley said the GST legislation has been approved by the Lok Sabha and it is currently stuck in the Upper House, "but not because of any ambiguity about the GST idea in India, but essentially due to political reasons with one political party trying to obstruct it".
"All others, including most of the Opposition and regional parties, are supporting it. The numbers in Parliament are in favour of the Bill and I have no doubt that in one of the coming sessions of Parliament, the present or the next one, the GST legislation itself would be passed.
"GST is not an income tax law, it is a transactional tax and even if my target is of April 1, 2016, somebody tries to derail that target, it is a law which can be brought into force any given day, either in the beginning of the year or in the course of the year," he said.
"The government at the Centre is fairly determined to have the GST legislation approved by the states and passage of all supporting legislations. The backbone infrastructure is being put in place. This is one area where we are very keen on," he added.
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