By: The Information Daily
Source: http://www.egovmonitor.com
Category: Foreign Investment In India
India needs to show it has a stable taxation and investment regime in order to attract foreign direct investment says D. Subbarao, Governor of the Reserve Bank of India
In a speech to the Asia Society earlier in the week The Governor of the Reserve Bank of India (RBI) waded into the current debate on retroactive taxation provisions, which the Indian Finance Ministry has now said would be deferred.
The Central Government in its 2012/13 budget introduced a retroactive taxation provision following the government’s defeat in the Supreme Court that threw out the tax demand on the Essar-Vodafone deal.
In addition, the 2012/13 Finance Bill also introduced provisions in which investors would have to demonstrate proactively that they did not need to pay additional taxation rather than relying on the IRS to identify the taxation required
These policies have had an adverse impact on India’s foreign direct investment. The RBI Governor in his speech and the subsequent question and answer session tried to allay the fears of foreign investors.
D. Subbarao claimed that India still has an investor friendly environment with the central and state governments anxious to attract investment. However, he acknowledged that India needs to demonstrate it has consistent policies which are investor friendly.
"We need to streamline our foreign investment policy and procedures, improve infrastructure, improve our governance," he said. "Potential foreign investors have to have confidence that India has a stable, predictable, transparent capital sector regime".
Source: http://www.egovmonitor.com/node/53694
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