More measures during passage of the Budget: Chidambaram

Interview with Finance Minister

Admitting there were challenges before the economy, Finance Minister P Chidambaram said at a post-Budget media conference that another set of decisions and measures would be announced during the Budget's passage in Parliament. "One must be patient and wait for the appropriate time. Once the wheel turns, we will have more freedom to take action," he said. Edited excerpts:

On viability of fiscal deficit plan
The numbers are absolutely credible. The fuel subsidy bill is likely to be smaller as we are correcting diesel prices; we have also capped the number of subsidised LPG cylinders. So, there is every reason to believe fuel subsidy would be lower this year. As far as tax revenues are concerned, in the current year, when the economy is growing at a five per cent rate, the tax revenues are growing at 16.7 per cent. So, if the economy grows at 6.1-6.7 per cent next year, tax revenues could be assumed to grow at 18 per cent.

On tax residency certificates (TRC)
The explanation on that was in last year's memorandum, which has now been brought into the Act. So, nothing more is being done. It is possible the memorandum and the new explanation are added in a manner that there is certain ambiguity. Let me clarify. All double taxation avoidance agreements have two conditions. One is the condition of residency and the other of the person who is a beneficial owner. These are two separate conditions. TRC certifies that you are a resident. It does not certify you are a beneficial owner. For example, for interest income, dividend income and royalty, he must be a resident as well as beneficial owner to claim the benefit.

On transfer pricing
As a developing country, we must protect our tax base. We are not a banana republic. In one particular case of Shell, since it involved a large amount of money, it also involved interpretation of a crucial section of the I-T Act. I have decided to refer the matter to the Attorney General. The government voluntarily referred the matter to the highest law officer to interpret a section, to know what the scope of the section was. I think we are going about it without any bias and without any preference. We are not making any pre-judgement about tax liabilities.

On 10 per cent surcharge on the super-rich and whether it will lead to tax evasion
I have not used the word super-rich. It's a tax on 42,800 people with taxable income of Rs 1 crore a year. It has been done for just a year because revenues are under pressure and we have to bring the fiscal deficit down to 4.8 per cent in 2013-14. Once tax revenues grow, a year later, we won't need the surcharge. It is like a bridge. Of the Rs 13,300-crore additional revenue we would get from direct taxes, the bulk would come from surcharge. It won't promote tax evasion. Our tax rates are comparable with other countries.

On not offering income taxpayers an amnesty scheme
There is no case for any amnesty in income-tax. Tax rates are moderate and we have largely computerised it. There is no scope to hide your income. We did not want heavy regulation in service tax because it was a relatively new tax. We have given one chance to taxpayers to come clean.

On excise or service tax correction
I can't predict what mid course corrections would take place. At the moment, we are keeping it at the standard rate.

On subsidies to be covered under direct benefits transfer
Food and fertiliser subsidies would be the last to be transferred through the scheme. All scholarships and periodic payments could be brought under it.