Congress slams government over decision to waive tax of FIIs

New Delhi, Sep 2 (IANS) The Congress on Wednesday slammed the central government over its decision to waive Minimum Alternate Tax (MAT) on capital gains made by FIIs, saying “it once again proved that the Modi government is indeed a suit-boot ki sarkar”.

The decision of the BJP-led alliance “to waive off tax liability of more than Rs.40,000 crore” owed by foreign firms once again proved that “this is a government of flip-flops, acts first – thinks later”, Congress spokesperson Abhishek Manu Singhvi said in a statement.

“By agreeing to not recover Minimum Alternate Tax (MAT) on account of capital gains by Foreign Institutional Investors (FIIs) amounting to a whopping Rs.40,000 crore, Finance Minister Arun Jaitley has once again proved that the Modi government is indeed a suit-boot ki sarkar (government for the rich), rather than a government of the common investor, Indian entrepreneur, farmer and service provider,” Singhvi said.

Congress vice president Rahul Gandhi has often described the Modi government as “suit-boot ki sarkar”.

Singhvi said the “convoluted manner of decision-making” has become the hallmark of Prime Minister Narendra Modi and the finance minister.

“…on April 15, 2015, Arun Jaitley said the government will press ahead with Rs.40,000 crore tax demand on the FIIs. He (Jaitley) said in a characteristic banter that the amount involved is Rs.40,000 crore. ‘I can change the face of India’s irrigation with that Rs.40,000 crore’,” Singhvi said.

The Congress leader said Jaitley found the tax demand as “reasonable” and proclaimed that waiving this tax demand would amount to turning “India into a tax haven”.

“Jaitley had been diabolically saintly in wondering then as to ‘how would I be answerable to parliament that I just waived Rs.40,000 crore’,” Singhvi said.

“We condemn the opaque decision of the Modi government to give extremely lopsided and unreasonable benefits to foreign firms and individuals who are benefiting out of the Indian domestic market,” Singhvi said.

Posing questions, the senior Congress leader asked if the tax liability of Rs.40,000 crore termed ‘reasonable’ by Jaitley in the past had suddenly become unreasonable.

He asked how the Modi government will now be “answerable to parliament” for “waiving” Rs.40,000 crore and if India had become a tax haven.

The government on Tuesday accepted the recommendations of the Justice A.P. Shah committee on the applicability of the vexed MAT on FIIs, and said it had decided to effect an appropriate amendment to the Income Tax Act.

“Through the amendment, the central government proposes to clarify that MAT provisions will not be applicable to FIIs/FPIs (foreign portfolio investors) not having a place of business/permanent establishment in India, for the period prior to April 1, 2015,” the finance ministry said in a statement.

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