Indian govt. restricts mobile connections for foreign tourists

According to a report appearing in the Economic Times (Sept. 2, 2012), the Government of India „has asked Telecom Service Providers not to provide mobile connection for more than three months to any foreign tourist visiting India“.

„Any mobile connection issued to a foreigner should not have a validity beyond the validity of the visa. In case of foreign tourist, the validity of connection should not be beyond the visa period and also not exceed three months at a time even if the validity of the visa is beyond three months,“ the fresh guidelines, which have been vetted by Union Home Ministry, said.

[Read the complete report]

The fresh regulations are set to cause hassles to foreign tourists, who regularly travel to India and wish to keep their local mobile number unchanged. It may be subject to question, how effective such a policy is going to be in achieving its stated objective, i.e. to check misuse of SIM cards by terror groups. Those bent on harming India can probably use the numerous STD/ISD booths, WiFi networks, or satellite phones without getting detected easily. It is a common, innocent tourist, who will have to face the hassles, despite registering him- or herself and thus being identifiable at any point of time. The regulations are especially and unnecessarily harsh, because they do not even allow a connection for the full period of visa validity and restrict it to a maximum of 3 months, as if a terrorist would misuse his or her connection only after 3 months.

This goes in the same direction as the (incomprehendible) restriction on entry within less than 2 months on a tourist visa, despite having a „valid“ visa for the complete duration. Those who wish to harm India probably do not necessarily apply for a visa and rather infiltrate the country in an illegal manner. But it is a commoner who usually suffers the consequences of a short-sighted policy.

Global investors warn India against implementing retrospective tax laws

Plans by India’s Finance Minister Pranab Mukherjee to amend taxation laws with retrospective effect, going as far back as 1962, have rattled global investors. Specially Item 113 of the Finance Bill, apparently targeted at Vodafone is troublesome. This amendment appears to circumvent judicial fair play and to undermine constitutional procedures in that it seeks to grant tax authorities with almost arbitrary powers that, if approved by the Parliament, would be enforceable „notwithstanding anything contained in any judgment, decree or order of any Court or Tribunal or any authority […]„. Even within India commentators have criticized the proposed amedment as „draconian“.

This is, however, not the only proposal causing headache to firms, global and domestic. There are reports that „tax commissioners would have powers to arrest industrialists or company officials under new provisions of the General Anti-Avoidance Rule (GAAR)„. Mr. Mukherjee has sought to reassure the industry by saying that „Tax department won’t act like policeman„. This is however, at best, a weak consolation since the very option remains in force. Mr Mukherjee reportedly also assured that „a plethora of cases would not be reopened for scrutiny„, which is an even more problematic statement since it means that the provisions of law would be probably applied selectively. According to one report, the proposed Finance Bill contains over 20 amendments with retrospective effect.

Now, „Industry groups representing 250,000 companies across North America, Asia and the U.K. have warned India’s prime minister that a proposed retroactive tax plan is causing foreign businesses to reconsider investing in India“, as Business Week (April 2, 2012) reports.A ccording to one report in the Daily News & Analysis the letter to Mr. Manmohan Singh states, „The sudden and unprecedented move in the Bill has undermined confidence in the policies of the government of India toward foreign investment and taxation, and has called into question the very rule of law, due process and fair treatment in India.“

Links to Reports on this Topic

 

„Will Vodafone ever get its money back?“

A very interesting article by Menaka Doshi on firstpost.com, which points to an extremely worrisome attitude displayed by the government in the Vodafone case. Try reading what apparently is the Item 113 of the Finance Bill tabled by Finance Minister Pranab Mukherjee. Decide for yourself and make your own opinion:

The reason why it [Vodafone] may not get its money back lies in Item 113 of the Finance Bill. The item, criticised for its breathless length, is harsher in what it attempts to do. It is draconian and pointed mostly at Vodafone. It seeks to deny any refunds to Vodafone and the like, irrespective of any court order. Here try reading it

113. Notwithstanding anything contained in any judgment, decree or order of any Court or Tribunal or any authority, all notices sent or purporting to have been sent, or taxes levied, demanded, assessed, imposed, collected or recovered or purporting to have been levied, demanded, assessed, imposed, collected or recovered under the provisions of Income-tax Act, 1961, in respect of income accruing or arising through or from the transfer of a capital asset situated in India in consequence of the transfer of a share or shares of a company registered or incorporated outside India or in consequence of an agreement, or otherwise, outside
India, shall be deemed to have been validly made, and the notice, levy, demand, assessment, imposition, collection or recovery of tax shall be valid and shall be deemed always to have been valid and shall not be called in question on the ground that the tax was not chargeable or any ground including that it is a tax on capital gains arising out of transactions which have taken place outside India, and accordingly, any tax levied, demanded, assessed, imposed or deposited before the commencement of this Act and chargeable for a period prior to such commencement but not collected or recovered before such commencement, may be collected or recovered and appropriated in accordance with the provisions of the Income-tax Act, 1961 as amended by this Act, and the rules made there under and there shall be no liability or obligation to make any refund whatsoever.

Well known Chartered Accountant T P Oswal says if 113 comes into force Vodafone will be denied any refund. Unless it challenges 113 in court and wins, Vodafone may have to bid adieu to the Rs 2,500 crore deposited with the Income Tax Department.

If such a regulation ever comes into force we may well have to ask ourselves some tough questions about the governance in India and the (dis-)regard that the government seems to have for a free and fair judicial system… The issue at stake is not the actual or supposed tax liability of any individual company but the fact that the government apparently does not shy away from using retrospective amendments to hollow out judicial verdicts while refusing to refund money despite court orders. The very idea to take decisions of tax authorities away from the purview of courts of law seems to be highly questionable and may even be seen as undemocratic.

Doshi concludes with these words:

But the bigger worry is the number of retrospective amendments in this Finance Bill. More than 20! Through these the Government is trying to invalidate a score of important tax judgments it has lost in the past few years. What message does this send to the tax payer? That it is pointless to honestly argue your tax position in a court of law because a win may mean nothing. And then we wonder why so many Indians and Indian businesses are always looking for a ‘way out’ or some manner in which to ‘influence’ tax policy and implementation!

Source:

Menaka Doshi: „Will Vodafone ever get its money back?„, 19.03.2012, accessed: 20.03.2012.

Note: Menaka Doshi is the corporate editor, CNBC-TV18.

Further readings:

India’s new budget proposes new tax slabs, more expenditure on education

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