US fears about India tax law misplaced: Mukherjee
Finance Minister Pranab Mukherjee on Friday dismissed as unfounded concerns by U.S. business groups that revised Indian tax laws might make foreign investors retroactively liable for taxes dating back decades.
"There is some sense of despondency amongst a section of U.S.A. businessmen, particularly because of their apprehension - and I would say misapprehension - about certain legislative amendments which we have proposed," he said in Washington.
The budget last month outlined a proposal to enable tax authorities to make retroactive claims on overseas corporate deals and bring in new measures to reduce companies' ability to avoid paying Indian taxes. Critics say the measures make India less attractive to foreign investors.
U.S. Treasury Secretary Timothy Geithner on Thursday pressed Mukherjee for reassurances India remains open to foreign investment, a U.S. Treasury Department spokeswoman said.
Mukherjee addressed the issue at a think-tank talk on the sidelines of the annual spring meetings of the World Bank and International Monetary Fund.
"Would the income tax cases be reopened from 1962? The answer is 'no,'" he said. "No case can be reopened which is more than six years old.''
"There is no uncertainty," he said, adding that India would hold transparent, open discussions with those who have complaints about the law.
The U.S. Chamber of Commerce, the U.S.-India Business Council, the Financial Services Forum and nine other U.S. business groups wrote Geithner on Tuesday, urging him to press Mukherjee on the issue.
The budget proposal would retroactively impose a capital gains tax on merger and acquisition deals conducted overseas where the underlying asset is located in India.
It would amend 50-year-old tax laws to allow New Delhi to pursue taxes on long-concluded transactions.
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