Finance minister P Chidambaram has ordered a review of tax provisions that have a retrospective effect, a move which is expected to bring relief to telecom operator Vodafone and help regain investor confidence.
“I have also directed a review of the provisions to find fair and reasonable solutions to pending as well as likely disputes between the tax department and the assessees concerned,” Chidambaram said in his first formal interaction with reporters after returning to the finance ministry.
The retrospective tax changes introduced in the 2012-13 budget had drawn sharp criticism from across the globe and scared investors.
Along with the General Anti-Avoidance Rules (GAAR) on tax avoidance, another controversial element of Pranab Mukherjee’s budget, it had rattled investors. The twin steps created a sharp divide within the government, with a strong school identifying them as key factors which forced investors to put their India plans on hold.
The decision, aimed at assuaging the concerns of foreign investors, marks a clear repudiation of Mukherjee’s legacy in the ministry.
CRANKING GROWTH ENGINE
INFLATION : Boost supplies, explore import of scarce items
INTEREST RATES : Take “calibrated risks” to stimulate investment, ease burden on consumers
SAVINGS : Step up investment in mutual funds, insurance
DROUGHT : Prepare contingency plan, converge NREGS and other schemes
INVESTMENT : Remove apprehensions, fast-track foreign investment, get PSUs to invest more
FISCAL CONSOLIDATION : New panel set up, adjustments in revenue and spending planned