Jaitley Hints At Tax Reforms

Union Finance Minister Arun Jaitley has indicated that the government may formulate a tax system of international standard in order to infuse a new life into the manufacturing sector. He also indirectly signalled the Reserve Bank of India (RBI) to cut interest rate.

Jaitley hinted at easing of entry norms for manufacturing. “Our regime has to be competitive. People purchase goods; they don’t like to purchase taxes along. Unless our taxation regime is internationally compatible, the cost of our products is going to be more. Competition is going to be international. Am I going to provide them a tax regime which is compatible to what they get across the world?” he said.

He said that the high cost of capital had slowed manufacturing. “We need to ensure capital is available, we need to ensure that for those sectors which are starving, we are in a position to provide adequate capital,” he said.

Talking about his first Budget, Jaitley said that he had introduced advance ruling mechanisms (on taxation) for domestic investors. “Even before they (investors) spend the first rupee or the first dollar, they are conscious of the fact as to what the tax administration is and what the tax liability is in India,” he said.