India pledges 'friendly' tax system to boost growth
India vowed on Monday to introduce a more "friendly" tax system and said it would decide soon whether to delay a controversial plan to fight tax evasion that has spooked foreign investors.
Finance Minister P. Chidambaram, who was appointed in July and who is seen as more pro-investor than his predecessor Pranab Mukherjee, told reporters that India "will be friendly to taxpayers... Nobody should harbour any fear."
He added India would have a "stable tax regime with clarity on tax laws" and authorities would have a "non-adversarial" approach to tax collection.
His comments came after one of India's top businessmen, software entrepreneur N.R. Narayana Murthy, slammed the government over its tax policies at the weekend.
Murthy said recent tax proposals had soured India sentiment among foreign business leaders and were "like taking a pistol and shooting ourselves".
The General Anti-Avoidance Rules (GAAR), introduced in this year's budget, seek to curb tax evasion through tax havens, but have been criticised as a money-grabbing exercise by a government battling to curb a ballooning deficit.
The tax proposals have stirred unease among overseas investors, with foreign investment for the quarter to June sliding by 67 percent from a year earlier to to $4.43 billion. A government panel proposed that the rules to clamp down on tax avoidance should be delayed by three years.
Data on Friday showed India's growth remained stuck at three-year lows of 5.5 percent, a high figure by developed nations' standards but far below the near double-digit growth of much of the past decade.