We didn't eat lizards when there was no FDI, says Pranab

The government, on Tuesday, said it will unveil white paper on black money and how it plans to tackle the menace in the ongoing Budget session of Parliament but reiterated its commitment to save Indian soil from becoming a tax haven in the name of attracting more foreign investment.

Replying to the debate on Finance Bill in Parliament, Finance Minister Pranab Mukherjee said that the Budget proposal to tax Vodafone-type deals was also about combating black money menace and that it cannot go back on its move to amend the Income Tax Act with retrospective effect to tax such deals.

“I would like to be guided either by Double Taxation Avoidance Agreement (DTAA) or tax. There cannot be a situation that somebody will make money on an asset located in India and will not pay tax either in India or to the country of its origin,” he said in his reply.

“Please remember, when the foreign investment was not there we did not eat lizard….. Therefore, we are not in that desperate a situation that a country of 1.2 billion people will be treated as a tax haven like Cayman Islands, Isle of Man or Virgin Island. We cannot be equated with them,” the finance minister said.

On postponing a major direct tax provision, the General Anti-Avoidance Rules (GAAR) by one year, the Minister said he took the step not because of any fear or apprehension. Coming back to black money, the finance minister the government will disclose the names of those who had stashed funds abroad only when prosecution is launched by tax authorities.

On the question of widening current account deficit, he said India needed to take strong steps to cut its fuel subsidies and address the problems of CAD. He said  the government’s aim of capping subsidies at 2 per cent of gross domestic product was not a "pipedream", but added that the burden of subsidies will have to be shared by all stakeholders including the Centre as well as the state governments, which should cut taxes on petroleum products.

Referring to the deteriorating fiscal health of the country in the past couple of years and slowing growth of Indian economy, he said the two big tax reforms, if allowed to be carried through, “will change the face of economy in no time”. He was referring to the Direct Tax Code and the Goods and Services Tax. The DTC, he said, can see the light of the day from next fiscal, but, for GST, he needed states’ consent. He also promised that the Centre will pay to the state on the  losses incurred this year.