New Delhi: Government will come out with a road map by next month for phasing out corporate tax exemptions and a gradual reduction of the tax rate to 25 per cent over four years, Revenue Secretary Hasmukh Adhia said. “The road map for phasing out of exemptions will be unveiled soon,” he said.
Asked if it can be out by the end of this calender year, he said, “It should come out.” Finance Minister Arun Jaitley, in the Budget, had said the basic rate of corporate tax in India at 30 per cent is higher than those prevalent in other major Asian economies, making domestic industry uncompetitive, and it would be brought down to 25 per cent over four years.
Asked if the government is open to the idea of out-of-court settlement in the Vodafone case, the Secretary said, “They had invoked arbitration and we have responded to it. And if there is offer for out-of-court, the government will consider it.”
India is locked in a Rs 20,000-crore tax dispute with the UK telecom major Vodafone. While the basic tax demand was Rs 7,990 crore, the total outstanding, including interest and penalty, is estimated to have risen to Rs 20,000 crore.
The case relates to the retrospective amendment of the I-T laws carried out by the UPA government in 2012 to overturn the Supreme Court verdict, which had favoured Vodafone. This case pertains to levy of capital gains tax on sale of India assets by Hong Kong-based Hutchison to Vodafone. Vodafone had initiated arbitration proceedings against India. While both the central government and Vodafone had named their respective arbitrators, the two have not yet been able to agree on a third arbitrator to preside over the proceedings.
The government had in June 2014 appointed former chief justice of India R C Lahoti as arbitrator in the tax dispute case. However, in May 2015, Lahoti recused himself. Vodafone has already named Yves Fortier of Canada as its nominee on the panel. After India finalises on its nominee on the panel, both the arbitrators would scout for a neutral judge and only then, the arbitration proceedings will start.
