While agreeing to reconsider some of the tax proposals on unbranded jewellery, Union Finance Minister Pranab Mukherjee on Tuesday reiterated his resolve to bring them under the tax net under a new formulation and promised to come up with a special package for silk weavers.
Replying to the debate on the general budget, which the Lok Sabha passed, Mr. Mukherjee hinted at the possibility of a rollback in the excise duty on the unbranded jewellery but made it clear that he needed more time to study the legal implications of whether it would be with prospective effect or come into force immediately.
While acknowledging the sentiments of the House, Mr. Mukherjee, however, said that he would come up with a new formulation wherein he would review the proposed requirement of PAN card for purchase of jewellery worth over Rs. 2 lakh.
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The Finance Minister made it clear there would be no rollback on the import duty announced on gold and platinum, expressing concern over the outgo of precious foreign exchange on the import of dead assets that caused problems in the country. Members had pointed out that small traders had shut shop for 12 days now.
Acknowledging problems faced by silk weavers, Mr. Mukherjee said he would work out a special package for them.
Mr. Mukherjee justified both his proposal for amending the IT Act with retrospective effect in line with the directive of the Supreme Court and the introduction of General Anti Avoidance Rules (GAAR), both of which has been resented by industry.
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Denying any vindictive motive, Mr. Mukherjee pointed to the law that prevented reopening of cases beyond six years and said the apex court had directed the government to clarify the intent of determination of tax.
While assuring members that the government did not intend to reopen all cases, Mr. Mukherjee said the attempt was to explain that India was not a no-tax haven and one was not required to pay tax if one paid it in one's country of origin if the country had double taxation avoidance agreements (DTAAs).
Investors are required to pay in only one of the contracting countries, he said, and that the objective was to avoid double taxation and outflow of revenue.
As for CAAR, he said the idea was to check generation of black money and not to harass honest taxpayers.
Stressing his resolve to keep subsidies below the two percent level of the GDP, Mr. Mukherjee made it clear that the path ahead would have to be trodden jointly by all, to cope with a number of problems confronting the country, including external factors such as crude prices.
“The ground reality is we don't have a clear mandate. We have a mandate, yes, but that was to carry others with you. Others may not share your perceptions…it may be strenuous and time-consuming…but get things done through consensus.”
Wondering if the country would be able to import crude oil if its prices touched $150 or $200 per barrel, Mr. Mukherjee said the only way out would be to “indulge collectively.”
Stressing that the budget was not the only exercise to take corrective measures, Mr. Mukherjee maintained that coalition governments had survived despite differences of views for the reason that political establishments had recognised the significance of running coalition governments and also because of the inherent strength of the House.
“I am appealing to that inherent strength of the House, that this is a serious economic crisis we shall have to address collectively. Some efforts are being made through the budgetary exercise; but much more has to be done through our collective efforts, throughout the year because nobody can say, what would be the outcome.”