List of tax exemptions to be phased out in few days, assures Jaitley

Finance Minister Arun Jaitley on Wednesday said the government in the next few days will bring out a list of tax exemptions to be phased out as part of the exercise to reduce corporate tax rate to 25 per cent in four years.

The minister also said measures to protect domestic steel sector from dumping by overseas manufacturers are being examined.

Stating that every tax demand cannot be termed as tax terrorism, he said, the government will not relent on pursuing black money in India or abroad.

As regards his Budget announcement of reducing corporate tax rate to 25 per cent, Jaitley said, "over the next few days we will come out with list of exemptions, which we intend to phase out in the first place.

Over the next four years corporate tax will come down by 5 per cent and lot of exemptions will get phased out.

"Therefore slowly we will bring taxation levels to global standards and make taxation assessment and return simpler by just eliminating a lot of exemptions."

Jaitley was speaking at 'India Summit 2015' organised by UK-based Economist magazine.

The finance minister in his 2015 Budget had announced that the government would reduce the rate of corporate tax from 30 per cent to 25 per cent over the next four years to align the rates with competing countries.

In view of surge in import of various categories of steel, the Directorate General of Safeguards (DGS) has already initiated an inquiry into the imports of steel from China, Korea, Japan and Russia.

Observing that the government is balancing the interest of steel consuming industry and domestic producers, Jaitley said the current problem in the sector was on account of external factors.

"It's an external issue. We have marginally increased our tariffs (on steel imports) twice."

"We are looking and seriously examining other steps so that we can address the problem which can be defencive against dumping of steel," he added.

On account of surge in imports, the market share of domestic producers has been declining since 2013-14 and is likely to fall from 45 per cent to 37 per cent in 2015-16, a government report had said.

Answering questions on the black money, Jaitley said the problem is confined to few individuals and the government will not go soft on the issue as it needs to bring all its resources within the banking system.

"It is extremely legitimate for any country to say my resources must come within the system, they must not remain parked outside the system.

"We were reasonable enough to put people on notice and gave them a fair opportunity to bring them in," he said.

To deal with the problem of unaccounted assets stashed outside the country, the government came up with a black money law. Under the law, a 90-day compliance window has been provided to such people to declare overseas assets, pay 60 per cent tax and penalty and come clean.

The compliance window ends on September 30 and after that harsh provisions, which include 120 per cent tax and penalty and jail term up to 10 years will come into play.

Nobody can claim a fundamental right to keep and deal in black money, Jaitley said adding "no economy can survive on that basis.

"And therefore I can only tell that those who disagree on black money issue, well we will agree to differ, but this is not an issue which we are going to go soft on."

Jaitley said that expansion of banking, introduction of payments banks and other schemes, which are being considered by the government were aimed at brining in all the resources into the banking system.

"I must tell you with great sense of discomfort that I have delegations coming to me saying please go easy on domestic black money because this is at least adding to economic activity. Now, no economy can indefinitely sustain an argument of this kind," he said.

On whether the tough stance on black money is hurting the real estate, he said, "the construction sector went slow because of economic reasons, there may be other reasons, land can be a reason, interest can be a reason..." Answering questions on the implementation of Goods and Services Tax (GST) from April 2016, Jaitley said, "the date today doesn't seem to be under my control because of obstructionism of Congress, but hopefully sooner or later it will be passed and we will have a much easier indirect tax regime."

Although the government has proposed to roll out the GST from April 1, the amendment to the Constitution Amendment Bill is being held up because of political logjam in the Rajya Sabha where the ruling NDA does not have a majority. He further said that it would be wrong to describe all tax demands as "tax terrorism".

"Nobody is happy to make large amount of taxes and therefore every tax demand is not tax terrorism. Most tax demands are legitimate.

Out of about 3.5 crore people only 2 lakh accept these scrutinising reports. This new system that they (revenue department) are following is not coercive," Jaitley added.

Stressing that the government's taxation roadmap was very clear, Jaitley said, "we have substantially put the whole idea of retrospective taxation to rest. Government has no intention."

The government, he added, was trying to resolve all major taxation issues outside the judicial system barring one (Vodafone tax case) which would be resolved through the judicial process.

"Of the major legacies issues, only one or two are left. I do not see much time before they are put to rest. The instability in tax administration is now being slowly (resolved)," the minister said.