Foreign investors should not look to the Indian government for now to provide relief from a ruling requiring them to pay taxes on years of previously untaxed capital gains, Indian Finance Minister Arun Jaitley said on Thursday.
U.S. and European investor groups are upset with the Minimum Alternate Taxation (MAT) measure, which would apply levies for past years at a higher rate than they had been subject to in the past. Tax experts say the foreigners may owe $8 billion.
Many foreign investors have been receiving notices requesting their MAT calculations for financial year 2011-2012. The tax office has said it would also apply the tax to previous years.
Jaitley pointed out to a seminar in Washington on Thursday that the 2015 budget exempts foreign profits from the MAT as of April 2015.
But he said that with regard to previous years, the foreign institutional investors had gone to a judicial tribunal and lost. He suggested that if they want relief, they should appeal rather than asking for him to step in.
"Their expectation that having lost the case the state must now intervene. That looks a little difficult from my point of view, and therefore they have the option of agitating their remedies in law," he said.
"It may not be possible for any government after a court verdict, which is a transient court verdict, which is still subject to appeals, to intervene in those particular matters."
On another matter affecting taxes, Jaitley said the government intended to pass a bill to restrict greatly the use of cash, for example banning it in property transactions, in order to bring unaccounted money out into the open.
And the government intends to crack down on undisclosed foreign assets and income, providing a compliance window when they could be disclosed and taxed, but then imposing jail sentences afterwards.