FM Arun Jaitley for friendly taxes to discourage evasion
Finance Minister Arun Jaitley on Thursday said tax rates should be brought down to reasonable levels to get rid of rampant instances of evasion and to improve the environment for investments.
“Our tax system has to be friendly for tax payers and that is what we are trying to do step-by-step,” Jaitley said in the Lok Sabha during a debate on black money.
Advocating a tax structure which discourages evasion, he said there was a misconception that high tax rates lead to higher revenues.
“High tax rates do not necessarily mean more revenue collection… direct and indirect tax rates have to be brought to reasonable levels so that the basket increases and there is no incentive for tax evasion,” Jaitley said. The minister added there was a time when India had very high tax rates, and the country’s growth rate was mocked as ‘Hindu rate of growth’.
Referring to steps being taken by the cen- tral government to unearth and bring black money stashed abroad, Jaitley said the government has identified 427 account holders associated with the HSBC list and efforts are on to complete tax assessment by March 31, 2015. He also said that prose- cution has already been launched in several cases while the cases would be filed every week, and names would be made public.
“When the media comes to know (names of black money holders), it will note that there are influential people in the list (of foreign account holders),” Jaitley said. Members of the Congress and the Trinamool Congress, however, were not sat- isfied with the finance minister’s assur- ance and staged a walkout.
Asserting that the government would have to move carefully, he said that those pushing for immediate disclosure of names would be indirectly helping black money account holders as the latter would be alerted.
“Some account holders have already withdrawn money (from offshore illegal accounts)… We necessarily do not need to show bravado and adventurism,” he told Samajwadi Party chief Mulayam Singh Yadav who wanted to know if money was still deposited in accounts abroad after reports of withdrawal of money from about 18 illegal accounts in Liechtenstein. Jaitley said,
“In the last few years, as an economy, we got a bad name from the world of investment for not being a tax- friendly regime.” While giving an overview about treaties India has signed with various countries to deal with the black money, the finance minister hinted at changing laws as he accepted weaknesses in them. “I admit that there is a weak- ness in law. If the black money stashed abroad has to come, how will it come? Even the SIT is worried about this,” Jaitley said, while answering a question on how soon could the black money be brought back.
Meanwhile in the Rajya Sabha, the government allayed apprehensions over continuance or dilution of MNREGA scheme launched by the previous UPA government, and said all necessary funds had already been released for the welfare scheme.
“There is no ambiguity about the government’s intention. The scheme will continue in all the 6,500 blocks,” Rural Development Minister Birender Singh said.
