Rajya Sabha Okays Finance Bill 2012 - FM ready to bite bullet if needed; Determined to collect tax from Vodafone
THE Rajya Sabha yesterday returned the ‘Finance Bill 2012', as passed by the Lok Sabha. In a very long speech the FM strongly defended the Vodafone amendment. Excerpts from his speech.
Bite the Bullet: The Finance Minister should not hesitate to bite bullet; I am not hesitating. But I would like to bite bullet when I see that my biting bullet will end in results, not merely making a proposition, and thereafter finding it that it is ending in a fiasco. It is not that. It must achieve success; it must achieve the objective; it must achieve the goal, which I want to do. Collectively, we shall have to decide it. Petroleum prices are increasing by leaps and bounds.
Three major questions are staring at our face. We cannot keep them under any carpet. If we do not take corrective measures, we will have to face the disastrous consequences. Therefore, we shall have to think on these lines. It is not merely my own thinking or the thinking of the Government of-the-day. Today, we are here; tomorrow, you will come; day-after, somebody else will come; after some time, again, we may come back. Parliamentary Democracy's mortality rate is very high. Who doesn't know about it? But, despite that, the system continues. King is dead; ‘long live the king'. It is equally applicable in Parliamentary Democracy.
I am going to issue some austerity measures. And as at one point of time not long ago, my ministerial colleagues, particularly, those who are tall and high, they became very angry with me when I said you will have to travel in the normal class, 'Y' class, not 'J' class, they said there is no adequate leg space, what should they do. What type of austerity measures we are going to have, we are going to take them, but some sort of austerity measures to convey the signal that we are responding to the situation as needed.
Vodafone: It is not disrespect to the Supreme Court. It is not to ignore the Constitutionally assigned responsibility of the Supreme Court. In a federal democracy, where there is division of powers, each constitutional organ has its own responsibility. Just as the Judiciary has the right to interpret laws, the Legislature has the right to enact laws. And if, in that process, there are divergences of opinion, it should not be treated as confrontation; it is an honest difference of opinion, and if we make an attempt at reconciling that honest difference of opinion, it is not wrong.
I have international agreement with 82 countries in respect of the Double Taxation Avoidance Agreement. I would like to ensure and implement that in letter and spirit. But companies have to pay taxes if they gain from Indian asset. I am not going into the details of the Vodafone case. I explained it to them when their representatives came to see me. I told them, 'we have informed you in the month of March, not once but twice, that your transactions are going to attract tax. You have the responsibility to deduct taxes.' India is not a tax haven. I want foreign exchange. But for that, I would not like to convert India into Cayman Island or Isle of Man. India will have to be a country which honours its international commitment. At the same time, we will have the legitimate tax demands. During Yashwant Sinha's time, the whole section was inserted in the Income Tax Act with effect from 1962. Every Finance Minister has done it, but, in this case, somehow it has attracted wide attention because it involves big companies and huge amount. I shall also have to look at my own interest.
What would have been the consequences if I would not have done it? There are many companies; they have accepted the interpretation of the Income Tax Department. They have paid taxes. They have not challenged it once it became the law. Supreme Court's interpretation, unless it is changed by the subsequent amendment of the Act, stands as the law. I shall have to pay Rs.40,000 crore to Rs.50,000 crore, which is not acceptable. They deposited Rs.2,500 crore as per the direction of the Supreme Court. I paid it back to them with interest. I have paid interest for the period for which I retained the money. My point is very simple. Yes, I want FDI and for that I have taken a series of measures in my Budget. I am not going to read it. I have taken a series of measures to attract FIIs and FDI.
ECB: I am fully aware of External Commercial Borrowings. I am fully aware of it. It has been pointed out that I should not fall into the debt trap and create a situation similar to 1991.
DTC: We are going to implement the Direct Tax Code in the coming Monsoon Session. I express my deep gratitude to the Chairman and all the Members of the Parliamentary Standing Committee on Finance, who have done a good job. If I would have got it little earlier, then, many of these things, I could have implemented in the Budget, but whatever it is, for the Direct Tax Code, it is not necessary that I shall have to wait for the Finance Bill, I can do it at any point of time after obtaining the approval of the Parliament and both the Houses, when we will get it through.
GST: We have made substantial progress on GST. It is not that there has not been any progress in it but please remember that it is not a very easy task. The States have their own way of functioning. They have their own compulsions. Simply, I cannot blame them. They will have to keep in mind their own requirements. Now, we are running a coalition Government. The coalition has its own advantages, it has its disadvantages. Its great advantage is that decisions are taken through broad consensus, and, that has its own strength. It is a great advantage.