Govt's 'tax terrorism' responsible for stock market slump: Cong

More than Rs 2 lakh crore was wiped off from the overall investor wealth

Congress on Tuesday held National Democratic Alliance's "tax terrorism" under Finance Minister Arun Jaitley responsible for the free-fall of stock market, flight of foreign capital, and weakening of the rupee.

"It is NDA's tax terrorism... the Income Tax Department under the finance minister has been indulging in tremendous dithering and inconsistencies leading to spooking of investors, markets as well as the Indian rupee," Congress spokesman Rajeev Gowda told reporters.

Gowda said Jaitley had many points to make on the issue of retrospective taxation while campaigning for the Lok Sabha polls. But "since coming to power, his many u-turns on the MAT (minimum alternate tax) issue and retrospective taxation have left foreign investors bewildered and baffled," he said.

When India needs more investments and was being seen as an "attractive destination", the NDA government's "tax terrorism" has spooked investors and hurt India's prospects, the Congress leader said.

He claimed another instance of the finance minister being "clueless" is the tax department's effort to make every Indian who makes a foreign trip file detailed reports on financial aspects related to such trips.

"The ostensible aim is to track possible outflows of black money. The reality is that the government is creating a haystack of forms in the slim hope that it can find an elusive needle in it. The finance minister has rushed to do damage control on this issue as well," Gowda said.

Instead of focusing on damage control, the finance minister should  exercise "proactive control" over his department and officials and to ensure that India's financial sector is not hurt by his government's tax-related "misadventures and mismanagement", he added.

The Congress criticism came on a day when markets went into a free-fall with stock benchmark Sensex crashing 630 points to below 27,000-mark and rupee plunged below the Rs 64-level.

The weakness in global bond markets added to negative sentiments and a sharp plunge in banking and many other key stocks led to the BSE Sensex plunging over two per cent to close at 26,877.48 points after two days of straight gains.

In the process, more than Rs 2 lakh crore was wiped off from the overall investor wealth, measured in terms of collective value of all listed stocks in the country.