New Delhi, July 13 (TruthDive) : Tax man who issued notices on transfer pricing order violation by MNCs was shown the door.
The transfer took place two days after finance minister P Chidambaram pitch to US biz that India is an investor-friendly nation after he rolled out his reforms. Fin Min silently shifted Joint Secretary (Foreign tax division) New Delhi from the post and did not assign him any other post.
CBDT issued the order transferring S K Mishra who found many MNCs including Shell and Microsoft on the transfer pricing issue. Mishra has eighteen months more service in this post.
Former director of the foreign tax division, Akilesh Ranjan comes back to Mishra’s post.
Akhilesh Ranjan was in the CBDT investigation arm in Mumbai. During the stint of Pranab Mukerjee as Fin Min, Mishra spearheaded the GAAR known as general anti-avoidance rules that scared the foreign investors since it came with retrospective effect.
Vodafone is one casualty in this law. As a member of the tax credit committee, he tightened the credit system. Last 2012 fiscal, the revenue from transfer pricing was Rs 44, 500 crore and this year it is Rs 77, 000 crore.
He taxed Microsoft R&D since he claimed that it was the driver behind the company’s global profit and the earnings generated from it should be taxed. The Finance Ministry had to send out a clarification on R&D centres of MNCs operating in India to soften the ruffled feathers.
The Finance Ministry has been asking tax men not to harass foreign investors with notices demanding millions of rupees. Chidambaram was also against tax men conducting raids under the guise of search in MNC offices and industrial offices. The raid on Nokia’s Chennai plant is one instance.
MNCs say they are cooperating with tax authorities by giving relevant data and the bilateral agreement between their parent company nation and India but the IT is treating them like tax evaders and spoiling their global image.
Chidambaram’s economic policy is heavily dependant on foreign investments.