Chidambaram Pledges Stable Tax System For Indian Businesses

by Lorys Charalambous, Tax-News.com, Cyprus

11 October 2005

Indian Finance Minister P Chidambaram told the country's exporting businesses that they can expect a stable tax system in the years ahead, although he remained unmoved in the face of complaints that companies are paying too many taxes.

Speaking at the 47th AGM of the Chemicals & Allied Products Export Promotion Council (Capexil) last week ahead of next month's discussions on the 2006/7 budget, Chidambaram pledged to deliver a "friendly tax administration".

"You will have a stable economic environment, stable tax rates and we promise you a hearing if you have a grievance," he stated.

However, Chidambaram asserted that businesses must be prepared to shoulder their share of the tax burden, and refused to acquiesce over the removal of unpopular taxes such as the fringe benefit tax, banking transaction tax and export taxes, saying that taxes are "part of life."

"Some taxes have to be paid. Have not the taxes come down (over the years)? If more people pay taxes, you will pay less taxes," he stated.

Nonetheless, Chidambaram indicated the the government was keen to reduce or eliminate trade tariffs in a bid to boost trade, and pointed to the success of agreements such as the Economic Cooperation Agreement with Singapore and the Free Trade Agreement with Thailand.

"All empirical evidence shows that lowering of tariff increases trade," he noted.

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