15/04/2015 9:25 AM IST | Updated 15/07/2016 8:25 AM IST

Foreign Investors Might Have To Pay Rs 40,000 Crore After Losing Tax Dispute

MONEY SHARMA via Getty Images
India's Finance Minister Arun Jaitley gestures as he speaks during the third annual Growth Net summit in New Delhi on March 25, 2015. The Growth Net summit, first convened in 2012, is an international conference focusing on growing economies in Asia, Africa and Latin America. AFP PHOTO/MONEY SHARMA (Photo credit should read MONEY SHARMA/AFP/Getty Images)

Finance Minister Arun Jaitley on Tuesday said the government will press ahead with the Rs 40,000 crore tax demand on foreign institutional investors as FIIs lost a case against levy of tax on capital gains they made.

"FIIs went to a tribunal, which is called Authority for Advance Rulings (against levy of 20 percent Minimum Alternate Tax on capital gains). They got a judgement against themselves. So, the tribunal has decided against them. The amount involved is Rs 40,000 crore. I can change the face of India's irrigation with that Rs 40,000 crore," he said in a television interview.

Jaitley said if the government did not tax FIIs, India would look like a haven.On Cairn Cairn India tax demand, Jaitley said the assessment orders were passed in January 2014.

The BJP government has abolished the MAT from April 1, 2015, but the demands pertain to tax related to earlier period and they wanted it to be waived. "To which I responded and said 'we are reasonable, so for the future I have waived it. But the tax demand after winning the case, if I waive off, we will be like a tax haven. How would be I answerable to Parliament that after the case I just waive Rs 40,000 crore?" he said.

On multi-billion dollar tax demands on Cairn Energy Plc of UK and Cairn India, Jaitley said the tax assessment orders were passed in January 2014 and demands were follow-up related notices. "Since they are entitled to challenge (notices) in court, we will see what the courts decide," he said.

Talking about the initiatives taken by the new government, Jaitley said in the last one year no retrospective tax law has been brought and "not a single new notice has been issued. My only problem is with regards to legacy issues that I inherited from the previous government".

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