Ravi Shankar Prasad in New Delhi on Tuesday. Picture by Ramakant Kushwaha
New Delhi, May 27: Ravi Shankar Prasad, Union minister for communications and information technology with additional charge of law and justice, said today that he won’t categorically rule out the need for retrospective taxation even though he generally favoured a stable fiscal regime.
“There can be a need for retrospective tax amendment but, in general, we favour a transparent and fair fiscal regime,” Prasad told reporters after assuming office, even as he tried to soothe foreign investors’ concerns over India’s quixotic and whimsical tax environment.
Foreign investors recoiled in disgust after then finance minister Pranab Mukherjee introduced a retrospective tax amendment in Budget 2012, which became effective from April 1, 1962, just to undermine a Supreme Court verdict that went in favour of Vodafone in a contentious withholding tax case arising from the UK telecom giant’s $11.2-billion buyout of Hutchison Whampoa’s 67.5 per cent stake in India’s second largest telecom entity in March 2007.
Later, in August that year, a committee headed by tax expert Parthasarathi Shome advised the UPA government against retrospective amendments in tax laws.
“Retrospective application of tax law should occur in exceptional and or rarest of rare cases… (and) should occur only after exhaustive and transparent consultations with stakeholders who would be affected,” the committee said.
Prasad refused to be drawn into a discussion on the Vodafone tax case saying that he would not discuss specific cases. He said he favoured “softer regulation” in telecom but again refused to spell out the specifics on his first day in office.
He said the Modi government was committed to the objective of building a “broadband highway” that would become a sort of game changer in much the same way as Atal Behari Vajpayee’s highways programme. “I have directed the department to work on more details of this project,” he added.
“I want to assure all investors that the new government shall act in a transparent manner. The decision-making shall be fair based upon the twin objective of growth and consumer satisfaction,” the telecom minister said.
The telecom department has been in the news for many wrong reasons and the first priority would be to set things right, he added.
Prasad said his first priority would be to restore investor confidence in the telecom sector. Ministry officials had made several presentations over two hours to the minister earlier in the day.