CII backs govt's Rs 40k-cr tax demand from FIIs

The Income Tax department had slapped tax notices on FIIs and FPIs of Rs 40,000 crore towards minimum alternate tax

Nothing wrong in government demanding Rs 40,000 crore as tax dues from the foreign institutional investors, industry chamber CII today said, stressing that India is not a "tax heaven".

"When the government says that there will be no retrospective tax, they are sticking to that, but never did they say that what is due will not be collected.

"India is not and never will be a tax heaven. You (FIIs and FPIs) want to do business in India, you must meet tax obligations of India... Nothing wrong in it," newly appointed CII President Sumit Mazumder told PTI.

The Income Tax department has slapped tax notices on FIIs and FPIs of Rs 40,000 crore towards minimum alternate tax (MAT) after they lost an appeal at the Authority for Advance Rulings (AAR) against levy of 20 per cent MAT on capital gains they made in years through March 31.

Finance Minister Arun Jaitley, too, had previously stated that India was not a tax haven and legitimate dues from foreign investors will be pursued.

In Washington, Jaitley had said: "It may not be possible for any government after a court verdict, which is a transient court verdict, which is still subject to appeals, to intervene in those particular matters."

On the statement of a few industry leaders that not much has happened on the ground with regard to ease of doing business, the CII President said the industry should give more time to the government.

"It is our responsibility (as a chamber) to temper there (industry's) expectations and tell our members that things have a process," he added.

He said the government has announced measures such as relaxation of FDI policy, coal auction and steps to improve ease of doing business and it would take time to show results.

"A lot of people are saying that we do not see results... You can't see results on the ground in 9-10 months. So, I believe foundation is being laid. Still, a lot more work has to be done, but what they have achieved in one year, I would say it is substantial," he said.

Eminent banker Deepak Parekh had said impatience has begun creeping in among businessmen as nothing has changed at the level that matters in the first nine months of the Narendra Modi-led government.