CII meet: Fixing mistakes of past, retrospective tax move will build trust, says PM Modi

“Recently, fixing mistakes of the past, we have decided to end retrospective taxation. The way in which this is being appreciated by the industry makes me believe that this will lead to the trust between industry and Government being strengthened,” Modi said at the annual session of the Confederation of Indian Industry (CII) through a video-conference.

The Prime Minister’s remarks came after both Houses of Parliament cleared amendments to the Income-Tax Act and Finance Act, 2012 to ensure that no demand shall be raised in connection with retrospective tax for any indirect transfer of Indian assets if the transaction had been undertaken before May 28, 2012.

Following the retrospective amendment moved by the UPA government in 2012, tax demands have been raised in 17 cases, including against British telecom company Vodafone and gas major Cairn Energy. The Government will have to refund an estimated Rs 8,100 crore to such companies in lieu of taxes collected earlier.

Stressing that the Government was pushing the boundaries in taking bold decisions, Modi said recent reforms have been done with conviction. “We have taken bold decisions. Reforms continued even during the pandemic. The Government is implementing reforms not out of compulsion but out of conviction,” he said while speaking on the theme ‘India@75: Government and Business Working together towards Atmanirbhar Bharat’.

The passage of The Factoring Regulation Amendment Bill in Parliament will help small businessmen get credit, and The Deposit Insurance and Credit Guarantee Corporation Amendment Bill will protect the interests of small depositors, he said.

Changes to the factoring law will enable nearly 9,000 NBFCs to participate in this market instead of just seven now. Improved participation by NBFCs in the factoring market will enhance liquidity for MSMEs and lower their interest costs.

On the growth of start-ups, the Prime Minister said India has 60 unicorns, 21 of which reached that status in the last few months, as opposed to possibly three-four unicorns seven-eight years ago. Investor response has been tremendous for start-ups and this signals that India has extraordinary opportunities for growth, he said.

Modi said the Government is ready to take political risks in the interest of the nation and push the boundaries of reforms even as he sought industry inputs on what more can be done. He stressed that the Goods and Service Tax was stuck for so many years only because previous governments could not muster up the courage to take political risks.

Modi also exhorted the industry to boost investment and take more risks to ensure the success of the Atmanirbhar Bharat mission, noting that the Government was prepared to remove restrictions to enable industry to do business.

“Industry needs to increase its natural risk-taking tendency. We will have to take new and difficult roads for the success of the Aatmanirbhar Bharat mission,” the PM said, noting that the country had expectations that industry would speed up growth in employment and investment.

“The success of Aatmanirbhar Bharat will require a manifold increase in investment in R&D, which is not possible through Government efforts alone. It requires major participation from industry,” Modi said.