In August, Parliament passed a bill to scrap a tax rule that gave the tax department power to go 50 years back and slap capital gains levies wherever ownership had changed hands overseas but business assets were in India. The bill provides for the government to refund the retro tax to companies provided all legal challenges are withdrawn
Finance Minister Nirmala Sitharaman has said that the Biden administration as well as leaders from the corporate sector in the US have welcomed as a very positive step the reforms undertaken by the Indian government, particularly the withdrawal of the retrospective tax.
In August, Parliament passed a bill to scrap a tax rule that gave the tax department power to go 50 years back and slap capital gains levies wherever ownership had changed hands overseas but business assets were in India. The bill provides for the government to refund the retro tax to companies provided all legal challenges are withdrawn.
“The reforms that we’ve undertaken, particularly the steps taken for the withdrawal of the retrospective tax has been mentioned by the United States administration as a very positive step,” Sitharaman said.
“The businesses with whom we have been interacting have also welcomed that decision,” she told reporters here at the conclusion of the Washington DC-leg of her US trip on Friday.
From Washington, Sitharaman will go to New York for an interactive session with the business community before flying back home.
The finance minister started her week-long trip from Boston on Monday.
“Many of them (businesses) thought it was bold and even though it took some time to come. We have also explained that they were legal compulsions before which we had to wait because some of the litigations which were going on had to come to a logical conclusion,” Sitharaman said.
“We waited and the moment the logical conclusions were reached, we went to Parliament in withdrawing that. That’s been overall very positively welcomed,” she said.
Responding to a question on a trade deal with the US, Sitharaman said her focus was on investment incentivising agreement for which there is time till December.
“We have spoken about it. The two countries would like to carry on the negotiation and conclude at the earliest,” she said.
“But on the larger issue of the trade itself is something which commerce (ministry) is working together with the (American) counterpart. So, I have not engaged in depth into that,” Sitharaman said.
No stranger to India-US relationship, as she played a key role in this and during her previous stints as the commerce and defence minister, it is Sitharaman’s first trip to the US after the COVID-19 pandemic hit both the countries.
In addition to participating in the annual meetings of the International Monetary Fund (IMF) and the World Bank here, her visit highlighted India’s economic recovery and her government’s commitment to long-term reforms.
On the sidelines of the IMF and World Bank discussions, Sitharaman had more than 25 bilateral meetings, the most significant of which was the India-US Economic and Financial Partnership.
That meeting was co-chaired by finance minister Sitharaman and US Treasury Secretary Janet Yellen.
The discussions touched on key areas of economic recovery from the pandemic to macro economic outlook; cooperation on global economic matters; climate finance support to infrastructure funding and combating of financing of terrorism.
Sitharaman had a series of meetings with business leaders both in Boston and Washington DC.
A dinner in her honour hosted by India’s Ambassador to the US, Taranjit Singh Sandhu, at India House was attended by top US officials, including Special Presidential Envoy on Climate Change John Kerry, World Bank President David Malpass, USAID Administrator Samantha Power and Surgeon General Dr Vivek Murthy.
These engagements provided an opportunity to highlight structural reforms which the government has brought during the pandemic.