The government will close most retrospective taxation disputes by the end of this month to ensure policy predictability, revenue secretary Tarun Bajaj said Friday. “I am happy to say that we would be settling almost all the cases in that (Retrospective Taxation) in this month itself. So we will close this chapter once and for all,” Bajaj said, adding that stability, predictability and not giving any surprise was a matter of tax policy. The centre had abolished the retrospective taxation in August 2021 through an amendment in the tax law.

The two main affected companies Cairn and Vodafone have dropped all legal proceedings seeking to enforce the arbitration award against India after the amendment.

Bajaj also came down heavily on tax violations by a section of industry, especially in the light of recent cases of tax evasion. “During the course of the last one year, I have seen some very stark violations from the industry side on the taxation front,” Bajaj said at an interaction with industry organised by PHDCCI.

“There are cases of sheer avoidance of tax. You must have seen the recent searches that have been conducted and huge amounts of cash has been recovered from premises of some industrial units. I would say that sometimes our vision would get coloured by such anecdotal instances and isolated instances,” Bajaj said.

He added that the role of the business chambers also becomes very important in this case to ensure that such cases are minimized as they cannot be eliminated.

No extension of concessional 15% tax

Bajaj asked companies to set up greenfield manufacturing facilities before March 2024 to avail the concessional corporate tax rate of 15%, as the government will not give any more extension on the date.

“We would like you to set up your factories and manufacturing units fast. The time limit given right now is extended by one more year and yes, there will be a sunset clause and then you will move to 22%, which is what the corporate tax rate is. So, this has been given as a special dispensation for manufacturing units to come up and set up their factories sooner than later,” Bajaj said in a post budget discussion with Assocham.

”My own assessment is, as companies exhaust their exemptions, they would start moving to the new tax regime because there is a big difference between 30 and 22%”.

He added that in the last budget, and even this year, the emphasis has been on stability and predictability of the tax regime.

“We are not trying to tinker too much with the tax regime. Some little bit of changes, for some ease to the taxpayer provisions like the updated return,” have been extended for businesses.

Bajaj said that the quality of expenditure has been improving for the past three years and the capital expenditure as a percentage of GDP, which was languishing, has doubled in the past three years.