London: Seeking to soothe the sentiments of foreign investors, disturbed by fresh claims of tax on past transactions by Indian authorities, Finance Minister Arun Jaitley has said his government was rationalising the country's tax system to make it fair.
Arun Jaitley at London Stock Exchange with chief executive Xavier Rolet (Courtesy: Finance Ministry)
"We are trying to rationalise taxes - that is, lower taxes and introduce a non-adversarial and fair system" the finance minister told an event co-hosted over the weekend by the Federation of Indian Chambers of Commerce and Industry and UK-India Business Council.
His other engagements included unveiling of Gandhi statue in Parliament Square in the presence of Prime Minister David Cameron, among others, talks with Prince Charles, and meeting with a delegation of the Confederation of British Industry, led by director general John Cridland.
"We need a lot of investment in India. We need to ease the process of doing business. Therefore, slowly we are introducing changes in that direction," Jaitley said, adding a fair and equitable tax system was a top priority.
Indian Finance Minister Arun Jaitley with leader of the Labour Party Edward Miliband along with NRI lawmaker Keith Vaz (Courtesy: Finance Ministry)
The finance minister's comments came against the backdrop of the tax authorities slapping a $3.2-billion capital gains tax on Cairn India, a part of the Vedanta Group, for a transaction that took place some 10 years ago.
This tax, which was not explicitly in existence at that time, was introduced in 2012 with retrospective effect and has been a cause for much concern among foreign investors. Such retrospective tax is against the present government's stated policy.
Britain-based Vodafone faces a similar dilemma and so do some 30-odd companies.
But the finance minister, while not raising the issue directly during his various addresses, only stated what he has been maintaining in the past.
"We are correcting the aberrations in the taxation structure," said the finance minister, who is on a two-day visit here on his way back to India from the US.
"Our roadmap is very clear," he said, referring to the policies being pursued by the Narendra Modi government. He also made specific reference to Modi's Make in India initiative.
Jaitley also touched upon the latest coal and spectrum auctions that have evoked much interest, beyond the government's expectations.
"The success of these auctions demonstrate how corruption can best be avoided and fetch high values," he said.
He also made a political statement without directly referring to the the previous United Progressive Alliance (UPA) regime's prime minister Manmohan Singh."If he'd had his way, the crisis would never have taken place," said Jaitley, adding that even though the previous government had announced the coal auctions soon after it took over in 2004, it was unable to do so for the next 10 years.
"How can one allow such a system to continue," he queried.
Jaitley, who also held a series of meetings, notably with Leader of Opposition Edward Miliband and Indian-origin lawmaker Keith Vaz, and also with Chancellor of the Exchequer George Gideon Oliver Osborne, said India was now on a high growth path."We will have a 7.5 percent growth this year. It will be higher next year."