New Delhi, May 17: The government will be `liberal' in giving tax clearances for mergers, demergers and amalgamation of Indian companies to face competition, finance minister Yashwant Sinha announced today.This is to help restructuring Indian companies to face foreign competition by promoting industrial recovery, he said at a conference here. "It is the spirit of law rather than the text of law which is important," Sinha said at the conference of chief commissioners and director generals of income tax.He asked the tax department to gear up to meet this "new challenge" in adopting liberal approach to most of mergers, amalgamations and demergers.The apex bodies of industrial houses had requested to bring in amendments to the finance bill to facilitate restructuring of Indian companies, he said adding this could not be carried out as the budget had to be passed without any amendments and discussions in Parliament due to the fall of Vajpayee government.Whatever amemdments in this regard was possiblethrough notifications would be done at the earliest, he said. Emphasising that industrial turnaround was visible, Sinha said the bullish stock market went to show `economic stability'' brought about by his government policies had overtaken the political instability in the country.Expressing confidence over the buoyancy in the Indian economy, Sinha said the direct tax collections target for the current year has been pegged at a whopping Rs 60,000 crore this fiscal, projecting a 28 per cent year-on-year growth.He said the Central Board of Direct Taxes had done well to achieve 20 per cent growth in direct tax collections in 1998-99 in spite of industrial recession.This growth was commendable considering that direct tax growth was less than five per cent barring the Rs 10,050 crore collections under voluntary disclosure of income scheme (VDIS) to unearth the black money during the earlier year, he added.He said the number of personal income tax assessees was projected to double to two crore thisfiscal from the figure of about one crore a few years ago when the direct tax reforms were launched.Sinha said the prophets of doom had been proved wrong, with the economy during last fiscal registering a GDP growth of close to six per cent, the current account deficit had been curtailed to one per cent of GDP and inflation kept at less than five per cent. This had proved the predictions of these experts as well as some from abroad wrong, he said.He recalled the World Economic Forum president Claude Smadja having said that India would be facing yet another balance of payment crisis during 1998-99, and said this did not happen.Later while talking to reporters Sinha said the tax collections has started showing improvement since November after it suffered a setback in October.Collections during the current fiscal year had begun on an encouraging note with excise collections rising by 36 per cent during April as compared to the corresponding period of the previous year, he said.The customscollections during the period rose by seven per cent, Sinha added. On the stock market boom in the country, Sinha said the foreign institutional investors had started showing a renewed interest not only in India but in other emerging economies as well. "The feeling of disenchantment in the emerging market seems to be making way to one of confidence and they (FIIs) are returning to the emerging market," he said.He said the FIIs seem to have increased their investment in the country though they had not left the country. During the meeting, Sinha commended the performance of the Central Board of Direct Taxes.He said though the direct tax collections grew by 20 per cent during 1998-99, this was less than 35 per cent registered in 1994-95 and 24 per cent in 1995-96.
