Govt shows its resolve to fight black money menace, assures investors

The Narendra Modi government got cracking on the first day of office with the setting up of a Special Investigation Team (SIT) to unearth black money and by holding bilateral talks with the heads of the SAARC nations.

The government also sought to send a message to overseas investors that the new government will ensure a stable tax regime.

Speaking to the media after the cabinet meeting on Tuesday, law minister Ravi Shankar Prasad said retrospective tax should be generally avoided as the country needs foreign investment to boost the economy.

"The larger view is that retrospectivity is avoided to the maximum. The fiscal regime, the policy regime, taxation regime must be very evident because India needs investment," he said after taking charge of the ministry.

The earlier government had made amendments to the Income-tax Act with retrospective effect, which caused uncertainty among global investors.

Although this has been done to recover lost revenue as in the case of British telecom major Vodafone's acquisition of Hutchison's stake in the erstwhile Essar Telecom.

Vodafone has now gone for arbitration in the Rs20,000 crore tax demand by tax authorities in India.

On the Vodafone notice, Prasad said, "We will look into it. Our manifesto has been very specific that we want a stable regime where those who invest in India may not have to face uncertainty."

He said the government would ensure a stable fiscal policy and a legal regime for those who invest in India.

At the same time, he said, "any wrong doing or corruption or extraneous considerations shall be visited very seriously".

He assured investors that the NDA regime would be "fair, non-discriminatory, transparent and stable".

The cabinet meeting headed by prime minister Narendra Modi also discussed the issues of compensating victims of the train accident in Uttar Pradesh and related issues.

Twenty-eight people died in the accident while 14 others were seriously injured. Thirty-one people are still in hospital.

The government has already announced an ex-gratia payment of Rs2 lakh to the families of the dead, Rs1 lakh to those seriously injured and Rs20,000 to people with minor injuries.

Also see: Day 1, Act 1: Modi government sets up SIT to track black money

 and  SIT chief MB Shah assures speedy probe in black money cases