Finance Minister Arun Jaitley on Tuesday said the government will press ahead with Rs 40,000 crore tax demands on foreign institutional investors (FII) for capital gains made during previous years. The finance minister told NDTV that the tax demand was made in accordance with a law brought by the previous government and upheld by a tribunal.
"FIIs went to a tribunal, which is called Authority for Advance Rulings (against levy of 20 per cent Minimum Alternate Tax on capital gains). They got a judgement against themselves... So, the tribunal has decided against them," Mr Jaitley said.
Mr Jaitley in this year's Budget abolished the rule under which FIIs were taxed. However, waiver on paying tax on capital gains will apply from April 1, 2015; it will have no bearing to the Rs 40,000 crore in prior tax demand raised by the government, Mr Jaitely added.
"We are reasonable, so for the future I have waived it. But the tax demand after winning the case, if I waive off, we will be like a tax haven ....how would be I answerable to Parliament that after the case I just waive Rs 40,000 crore," he said.
On multi-billion dollar tax demands on Cairn Energy Plc of UK and Cairn India, Mr Jaitley said the tax assessment orders were passed in January 2014.
"Since they are entitled to challenge (notices) in court, we will see what the courts decide," he said.
Mr Jaitley reminded investors that in the last one year no retrospective tax law has been brought and not a single new notice has been issued.
"My only problem is with regards to legacy issues that I inherited from the previous government," he said.