Finance Minister Arun Jaitley on Tuesday said the Indian government has resolved various legacy issues with regard to taxation and is gradually working to bring down the corporate tax rates to the global level at 25 per cent from 30 per cent currently.
Speaking on the theme of 'Reimagining the Indian economy' at the SP Jain Institute of Global Management here, Jaitley expressed confidence that the long-pending Goods and Services Tax (GST) would get the approval of Parliament soon.
The minister further said that India achieved over 7.5 per cent growth rate despite global headwinds and the effort of the government would be to improve it further by promoting ease of doing business and attracting more foreign investment and preventing domestic investors from going abroad.
"One of the more important areas had been to bring India's taxation system compatible with global standards. Therefore, we are now working on direct tax systems where we want to put the disputes behind us.
"We want people to clean up their tax issues. And therefore, in this Budget I have also suggested various windows of clearing up pending disputes," Jaitley said.
He said the government is working to bring down India's corporate tax rates gradually to a fair international level which will involve "no discretion, no rent-seeking exemption, phasing all of them out gradually and then bringing taxation rate to a flat 25 per cent".
The Budget 2016-17 has provided for dispute resolution windows under which companies facing tax demands, which are stuck at various stages, can pay principal and interest or penalty and put an end to it.
As regards companies facing tax demands out of retrospective amendments, the Budget has provided a scheme under which interest and penalty has been waived off and firms can pay only the principal tax demand and settle the dispute.
On Goods and Services Tax (GST), Jaitley said one uniform common tax for whole of India, which converts the country into one big market and allows transfer of goods and services to take place across this large market, is pending before Parliament.
"I am quite certain and we are reasonably moving towards a situation where we should be sooner than later be able to clear this... in Parliament," he said.
The indirect tax reform GST is stuck in the Rajya Sabha where the ruling NDA does not have a majority. Congress has been seeking three changes in the bill, including a constitutional cap on GST rate.
The GST bill is likely to come up for discussion in the second leg of Budget session beginning April 25.
Among the challenges that India is facing, Jaitley highlighted the problem of stretched private sector and twin balance sheet of companies and PSU banks. "We are addressing that by recapitalising the banks, addressing the sectors which have caused stress".
"Despite a global slowdown we have managed to maintain 7.5 per cent growth rate. All our parameters... the Current Account Deficit... are very acceptable figures.
"I am reasonably certain (that) as the global push to the economy slightly improves, hopefully we have a better monsoon, and therefore these figures could look even better in the days to come," Jaitley said.
He added that the government has opened up various sectors, including insurance and railways, and has also removed unnecessary conditionality which was slowing down FDI.
"This, probably, in greenfield projects, has made India one of the most sought after destination as far as FDI is concerned," Jaitley said, adding that the government is taking steps to ease process of doing business by promising stability and predictability of policy, cutting short the time between decision of setting up business and actual implementation and easy and fewer approvals.
"There is a greater realisation that in a competitive world, it is not only attracting international investors but (also) domestic investors that is necessary and for that you have to easen business processes. That is an important work that is still in progress in India," he said.
The minister said India has been moving forward in eliminating corruption in decision-making regarding projects and environment and FIPB clearances.
"Corruption dissuades people from investment, it adds to cost of investment, and I think it is an important milestone where India seems to be moving forward (in eliminating corruption)...
"With regard to allocation of natural resources and other government largesses, discretion have now completely been eliminated and everything is to be done by policy through market mechanism or bidding system which is transparent. A lot of laws have been straightened up," Jaitley said.