India has assured the UK that it has no plans to invoke retrospective taxation. This assurance was given when the visiting UK Foreign Secretary, Philip Hammond called on Finance Minister Arun Jaitley here on Thursday. Incidentally, Jaitley had stated this in Parliament late last year.
Responding to a media query on whether the issue of the tax notice slapped on Cairn Energy and its impact on investor sentiment were discussed at the meeting with Jaitley, Hammond said that the Indian Finance Minister had told him that this particular tax demand was sent out in pursuance to a notice issued by the previous Government.
“Unfortunately since this is a process still running it will have to be resolved through courts. But this Government has not issued any new notices. I suggested to Jaitley that it will be a very good idea if he could make that message heard loudly and clearly at the investor conference in London that he is attending,” the UK Foreign Secretary told reporters.
On March 10, the Income-Tax Department had slapped ₹10,247 crore ($1.6 billion) tax demand on Cairn Energy Plc, which termed the action as “very disappointing” and said it would contest the order.
The tax demand relates to an alleged ₹24,500 crore worth capital gains it made in 2006 while transferring all its India assets to a new company, Cairn India, and got it listed on the stock exchanges.
Hammond added that for India to attract investment it (is) not enough to say that the country is open for business as Prime Minister Narendra Modi has done.
“The country also has to set down clear signals that the business climate and the business environment are predictable, stable and attractive for international investment,” he said.
Fighter jet deal Asked whether he would be taking up the issue of sale of 126 fighter jets to India, the Foreign Secretary said, “I have not raised it and I will not raise it. We respect the Indian procurement process. It will be wrong and improper to raise it at this time.”
He, however, added that UK was aware that the deal with Dassault has not gone smoothly and there may be an opportunity for Eurofighter at some stage to submit a bid. “If (the) opportunity does arise Eurofighter has a very competitive offer,” he added.
In January 2012, the over $10-billion (₹50,000 crore) deal to supply 126 fighter jets to the Indian Air Force was won by the French firm Dassault Aviation SA. The French company beat other contenders including Boeing, Lockheed Martin, Cassadian (formerly EADS), Eurofighter, Russian MiG 35 and SAAB to get the order.