New Delhi: In a post-Budget 2016-17 meeting with India Inc. on Wednesday, Finance Minister Arun Jaitley said the government has taken the first "significant" step to resolve retrospective tax cases by installing a statutory mechanism to handle these and reiterated the need for fiscal discipline to meet economic targets.
"I had hoped it would be resolved by courts or tribunals, where issues are pending. But now, I have a statutory mechanism of resolving it and therefore, again we have taken the first significant step forward in order to be in a position to resolve this (retrospective tax issue)," he told representatives here of industry associations FICCI, CII and Assocham.
"I think what is most important is our desire to resolve all pending disputes," Jaitley added.
In his budget speech on Monday, the finance minister made a one-time offer to corporates facing tax demands on account of retrospective tax, of waiver of interest and penalty if they pay the principal tax amount.
British oil major Cairn Energy is facing a tax demand of Rs.10,247 crore on a nine-year-old business reorganisation it effected in Cairn India, while another British firm, telecom giant Vodafone, is facing tax a liability over its $11 billion stake purchase in 2007 in the mobile phone business of Hutchison Whampoa.
Jaitley reiterated the need for fiscal discipline and said he was optimistic of the reform process moving ahead in parliament.
"Fiscal discipline is going to be very important, and I'm sure that if we keep to it, we'll be able to meet the targets set by Chief Economic Advisor Arvind Subramanian in the Economic Survey," Jaitley said.
"I am also sure, if there is cooperation in the political sphere, that we will be able to go ahead with reforms," he added.
The government has targeted reducing the fiscal deficit to 3.9 percent of the gross domestic product (GDP) in the current financial year, compared with four percent last year, and reduce it further to 3.5 percent in 2016-17.
The government said on Tuesday that a total of Rs.4.18 lakh crore of taxes are pending from corporate defaulters as of January-end this year.
"The total amount of corporate tax demand pending for collection at the end of January 2016 is Rs.418,399 crore," Minister of State for Finance Jayant Sinha said in a written reply to the Rajya Sabha.
The top 50 defaulting companies account for Rs.22,903 crore of the total amount due for recovery, he added.
Sinha said focused action by field formations, especially on high-demand cases is one of the strategies being adopted for effecting recoveries.