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Govt should quickly correct tax changes announced in Budget: Planning Commission

To boost investment and revive ?animal spirits?, the government should quickly correct the tax changes announced in the recent Budget that have been perceived as anti-investor, according to the draft 12th Five-Year Plan document.

To boost investment and revive ?animal spirits?, the government should quickly correct the tax changes announced in the recent Budget that have been perceived as anti-investor, according to the draft 12th Five-Year Plan document.

?An immediate policy objective in the very first year of the Plan must be to revive animal spirits, which have suffered for a variety of reasons. Some of the reasons for a downturn in investor sentiment can be easily corrected. For example, the perception among investors, that some of the tax changes introduced in the Budget are anti-investor need to be allayed as quickly as possible,? it said.

The recommendations of the two expert committees appointed by the finance ministry to look into these issues should provide a reasonable basis for reviving investor confidence, it said, adding: ?A firm decision on the recommendations of the Committee should be announced as early as possible.?

The Centre is expected to take a view on the Parthasarathi Shome panel’s suggestions on General Anti-Avoidance Rules (GAAR) and on indirect transfer of Indian assets to make these changes in the law introduced early this year more palatable to investors.

GAAR aimed at preventing aggressive tax avoidance by companies using complex corporate structures and the changes to the source code of taxation with the aim of taxing offshore transactions involving Indian assets had earned global criticism for being too harsh on investors.

The Shome panel had recommended stability and certainty in tax policy. Finance minister P Chidambaram, who promised a ‘non-adversarial’ tax regime, is talking to Prime Minister Manmohan Singh on resolving the two tax issues.

Another committee is reviewing the taxation of the IT sector and of development centres in order to make India a more attractive investment destination.

The 12th Plan further argued for the need to remove impediments to implementation of projects in infrastructure, especially in the energy sector.

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First published on: 29-12-2012 at 03:56 IST
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