Finance Minister Arun Jaitley has said the Budget has taken many steps that are necessary but were not taken in the past 10 years, be it in sectors such as insurance, defence, real estate investment trusts, simplification of tax administration, transfer pricing. Excerpts from his post-Budget interview to mediapersons:
As part of your Budget speech, you said there has been a lot of expenditure compression in achieving the fiscal deficit target last year…
I did not say that. What I have said and I have said it earlier also is that there are two ways of tackling the fiscal deficit — you either spend less or you earn more. The ideal situation is you should earn more because if you spend less then you are contracting expenditure and then you are contracting some parts of the economy. But neither the Economic Survey nor have I today indulged in any form of criticism of the past or taking digs at the past. I have instead looked at the unresolved issues that they have left behind and tried to address most of them in a period 45 days.
The Budget has retained the provision of retrospective taxation that was widely expected to be removed…
It is very clear that with regard to retrospective taxation, there are some crystal clear issues which come out. Does Indian Parliament have a jurisdiction to legislate retrospectively? The answer is yes, it has and I can’t curtail that jurisdiction, I won’t even try to. Two, will this government rely on the retrospective taxation legislation? The answer is no, ordinarily, we will not legislate to create fresh liabilities. This actually means that if some old taxes are being collected for the last 40 years and some technical problem arises, you can correct that. But will we create new liabilities with effect from a back date? The answer is ordinarily, no. Three, if the 2012 amendment remains, will fresh notices be issued under those? The answer is that assessing officers will not issue these notices. They will report these cases to the Central Board of Direct Taxes, which will have a permanent mechanism to process them. So these issues are clearly resolved. What happens to the past? The past is pending in courts or other tribunals. We will wait for the judgment and the legal process can resolve those cases.
The Budget has also announced that the government will increase foreign direct investment cap to 49 per cent in the insurance sector. Is there some re-thinking by the BJP on that?
What I have said reflects the policy of the government. This issue has to go to Parliament. We plan to bring it in soon and I am not going to spend too much time on it. My proposal is to permit FDI with a cap of up to 49 per cent in the insurance sector. It is a clear proposal. At present, we have said either category — FII or …continued »