Skip to main content

Tax terrorism has returned in India, warns American centre-right think-tank expert

The American Enterprise Institute for Public Policy Research (AEI), a center-right think tank based in Washington, DC, has warned that tax terrorism has returned in India. AEI's resident fellow Sadanand Dhume, in a strongly-worded commentary, says, the Narendra Modi government needs to immediately "stop sending mixed messages about its taxation policy" in order to attract investment.
The think tank wonders, "Finance Minister Arun Jaitley needs to decide: Is India to be a magnet for investment, or is it to squeeze every last rupee out of its private companies?", even as suspecting that a "a clutch of finance-ministry bureaucrats" are seeking to derail Modi’s grand plan to remake India’s economy."
"Recent damage to the government’s reputation—among both investors and ordinary citizens—suggests tax officials are on a collision course with the politicians they ostensibly serve. Unless resolved, the lack of clarity in the government’s approach to taxation risks undoing good work in other areas of the economy", Dhume says
He adds, "Speak with businessmen and reform-minded officials in India and a consistent concern will emerge: Tax authorities have brought a wrecking ball to Mr. Modi’s economic party."
Dhume bases his views on the manner in which in March the tax department used India’s "notorious retroactive tax law" to demand $3.3 billion from Cairn India, a subsidiary of Britain’s Vedanta Resources, for transactions dating back to 2007. 
At the same time, he adds, "foreign institutional investors began receiving notices to cough up a so-called Minimum Alternate Tax, which historically had only applied to domestic companies."
"Finance Minister Arun Jaitley declared that the demands could help the government raise $6.4 billion, before backing off amid signs of a stampede away from the stock market", Dhume says.
He adds, "Not content with spooking investors, officials have also proposed that ordinary Indians subject their foreign travel to the tax man’s tender scrutiny. They apparently believe India’s fiscal deficit can be bridged—and wealthy tax evaders snared—by quizzing middle class grandmothers on how much they spend while visiting their grandkids in Europe or the US."
"The government is also reconsidering the controversial new travel-reporting requirements, which kicked up a firestorm of protest on Twitter. Instead Mr. Jaitley has promised to radically simplify income-tax forms", Dhume notes.
"In the absence of philosophical clarity these steps risk appearing piecemeal rather than part of a coherent pattern. Inexplicably, the government has failed to repeal the 2012 retroactive tax law, arguably the single most damaging piece of economic legislation passed since India embarked upon liberalization in 1991", Dhume underlines.
"If the government is serious about fixing this problem, it needs to make up its mind. Is India’s main objective to become a magnet for investment, or is it to squeeze every last rupee out of private companies?", he asks.

Comments

TRENDING

Dalit rights and political tensions: Why is Mevani at odds with Congress leadership?

While I have known Jignesh Mevani, one of the dozen-odd Congress MLAs from Gujarat, ever since my Gandhinagar days—when he was a young activist aligned with well-known human rights lawyer Mukul Sinha’s organisation, Jan Sangharsh Manch—he became famous following the July 2016 Una Dalit atrocity, in which seven members of a family were brutally assaulted by self-proclaimed cow vigilantes while skinning a dead cow, a traditional occupation among Dalits.  

Powering pollution, heating homes: Why are Delhi residents opposing incineration-based waste management

While going through the 50-odd-page report Burning Waste, Warming Cities? Waste-to-Energy (WTE) Incineration and Urban Heat in Delhi , authored by Chythenyen Devika Kulasekaran of the well-known advocacy group Centre for Financial Accountability, I came across a reference to Sukhdev Vihar — a place where I lived for almost a decade before moving to Moscow in 1986 as the foreign correspondent of the daily Patriot and weekly Link .

Boeing 787 under scrutiny again after Ahmedabad crash: Whistleblower warnings resurface

A heart-wrenching tragedy has taken place in Ahmedabad. As widely reported, a Boeing 787 Dreamliner plane crashed shortly after taking off from the city’s airport, currently operated by India’s top tycoon, Gautam Adani. The aircraft was carrying 230 passengers and 12 crew members.  As expected, the crash has led to an outpouring of grief across the country. At the same time, there have been demands for the resignation of Prime Minister Narendra Modi, Home Minister Amit Shah, and the Civil Aviation Minister.

Global NGO slams India for media clampdown during conflict, downplays Pakistan

A global civil rights group, Civicus has taken strong exception to how critical commentaries during the “recent conflict” with Pakistan were censored in India, with journalists getting “targeted”. I have no quarrel with the Civicus view, as the facts mentioned in it are all true.

Whither SCOPE? Twelve years on, Gujarat’s official English remains frozen in time

While writing my previous blog on how and why Narendra Modi went out of his way to promote English when he was Gujarat chief minister — despite opposition from people in the Sangh Parivar — I came across an interesting write-up by Aakar Patel, a well-known name among journalists and civil society circles.

Remembering Vijay Rupani: A quiet BJP leader who listened beyond party lines

Late evening on June 12, a senior sociologist of Indian origin, who lives in Vienna, asked me a pointed question: Of the 241 persons who died as a result of the devastating plane crash in Ahmedabad the other day, did I know anyone? I had no hesitation in telling her: former Gujarat chief minister Vijay Rupani, whom I described to her as "one of the more sensible persons in the BJP leadership."

Why India’s renewable energy sector struggles under 2,735 compliance hurdles

Recently, during a conversation with an industry representative, I was told how easy it is to set up a startup in Singapore compared to India. This gentleman, who had recently visited Singapore, explained that one of the key reasons Indians living in the Southeast Asian nation prefer establishing startups there is because the government is “extremely supportive” when it comes to obtaining clearances. “They don’t want to shift operations to India due to the large number of bureaucratic hurdles,” he remarked.

Guha plans book to counter Dalit, Marxist, and right-wing critics of Gandhi, recalls Modi’s 'pernicious lie' on Patel

Let me first confess: writing about an event three weeks after it has taken place is no good, especially for a newsperson. However, ever since I attended the public lecture by well-known historian Ramachandra Guha on May 18, organised by Sarthak Prakashan for the release of the Gujarati edition of his book monumental book "India After Gandhi", frankly, I kept wondering if he had said anything newsworthy apart from what had already appeared in the media ever since the book's first edition came out in 2007. Call it my inertia or whatever.

A conman, a demolition man: How 'prominent' scribes are defending Pritish Nandy

How to defend Pritish Nandy? That’s the big question some of his so-called fans seem to ponder, especially amidst sharp criticism of his alleged insensitivity during his journalistic career. One such incident involved the theft and publication of the birth certificate of Masaba Gupta, daughter of actor Neena Gupta, in the Illustrated Weekly of India, which Nandy was editing at the time. He reportedly did this to uncover the identity of Masaba’s father.