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Tax Road Map to Deal with Disputes in Works Adhia

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India is preparing a plan to deal with the problem of a large number of tax disputes, a top finance ministry official said, in a bid to clear an almost intractable issue that's given the country's investment regime a bad name.
“We are preparing a roadmap separately for dealing with the existing tax litigation,“ Revenue Secretary Hasmukh Adhia said on Monday.
`Tax terrorism' has become part of the vocabulary in the country to describe the highpitched stance taken by the authorities, especially the amendment of the law that enabled taxation of indirect transfers of Indian assets with retrospective effect.
Tax demands exceeding Rs.4 lakh crore are under dispute and litigation in various courts and appellate authorities, Finance Minister Arun Jaitley had said in his 2014-15 budget speech.
The government is considering an option to raise the threshold for cases to be filed before the Income Tax Appellate Tribunal. The government will also come out with a roadmap by next month to phase out corporate tax exemptions and a gradual reduction of the rate to 25% over four years, the revenue secretary said. Adhia said the Justice RV Easwar panel will look at ways to simplify income tax laws, although it will not deal with the issues concerning the retrospective tax amendment. He said the terms of reference for the committee for the simplification of tax laws have been laid out and it will work accordingly.
Asked if the government is open to the idea of reaching an out-of-court settlement in the Vodafone case, the reve nue secretary said, “They had invoked arbitration and we have responded to it. And if there is an offer for out-of-court, the government will consider it.“
India is locked in a Rs.20,000 crore tax dispute with UK telecom company Vodafone, which had acquired indirect control of Hutchison Essar in India by buying an overseas company from Hutchison Telecommunications for $11.1 billion in 2007.While the basic tax demand was Rs.7,990 crore, the total outstand` ing amount, including interest and penalty , is estimated to have risen to over Rs.20,000 crore.
The UPA government amended the law to allow retrospective taxation of such transactions in 2012 to overturn a SC verdict that favoured Vodafone.

The Economic Times, New Delhi, 3rd nov. 2015

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