The Indian Government passed the <a href="http://www.businessinsider.in/searchresult.cms?query=income+tax+department&amp;sortorder=effectivedate">I-T amendment bill</a>, making the laws stricter but it is yet to see how strongly the laws will be enforced. 
 
According to <a href="http://www.businessinsider.in/searchresult.cms?query=demonetisation&amp;sortorder=effectivedate">new laws</a>, many unexplained expenditure, credits and deposits such as wealth inheritance from grandparents, wedding expenditure, etc will have to be explained. In case the person fails to give a ‘satisfactory’ reply to the taxmen on the source of funds received or give, he/she will have to cough up as much as 83% tax. 
 
"We have discussed the matter among ourselves. It's a strong provision in the (Income Tax) Act and the department would find it handy in mobilising tax from black money. But there are chances that it may be misused," a senior tax official in Mumbai which accounts for the highest direct tax collection told ET. 
 
READ ALSO: <a href="http://www.businessinsider.in/people-with-unaccounted-cashheres-how-the-i-t-department-is-watching-you/articleshow/56717177.cms">People with unaccounted cash: Here's how the I-T department is watching you </a> 
 
The relevant parts of the I-T Act are: Section 68 (dealing with unexplained cash credit, which is applicable to loans, gifts and share capital); section 69A (unexplained money, jewellery or valuable items); 69B (unexplained investment); and section 69C (unexplained expenditure.) Once section 115BBE is invoked, then the income (which is under question) cannot be set off against any other loss for the year or carried forward. 
 
The laws have gotten more teeth but can be misused too as the person only has to tell a right source of funds. Very few people maintain account books. 
 
“If one is able to establish unexplained deposits, loans, or investments, can the Assessing officer still not be satisfied? While every effort will be made by AO to determine identified credits as unexplained, assesses will try to prove otherwise by adequate evidences, by establishing the identity, capacity and genuineness,” Mitil Chokshi Senior Partners Chokshi and Chokshi told ET.

Tax laws have more teeth now but they can be misused too. Here’s how

<keyword id="58225" type="ORGANIZATION" weightage="100" keywordseo="NRIs">NRIs</keyword> with offshore bank accounts would not be able to escape the investigation by tax authorities. If found guilty, they will have to instruct the overseas banks to share their account information with the Indian tax office to prove themselves innocent. 
 
Only after the authorities are convinced that the money in the account does not belong to the person who has been pulled up for hiding offshore assets, would they be able to escape their eyes. 
 In a recent case, the Bombay High Court has dismissed the writ petition filed by an NRI, who was an alleged beneficiary of a trust which was linked to an <keyword id="832748" type="ORGANIZATION" weightage="100" keywordseo="HSBC-Geneva">HSBC Geneva</keyword> account, after she refused to sign the "consent waiver" form. Due to secrecy rules, Switzerland banks and tax havens don’t divulge account information until they get consent from account holders. 
 
The court, in its order dated April 5, said, "In the normal course of human conduct if a person has nothing to hide and serious allegations/questions are being raised about the funds, a person would make available the documents which would put to rest all questions which seem to arise in the mind of the authorities." 
 
Since the petition was not withdrawn, the order would most likely be used by the taxmen against those they suspect to have HSBC Geneva accounts. 
 
<a href="http://s3.amazonaws.com/armstrongeconomics-wp/2014/06/Swiss-COW.jpg">Image source</a>

Tax authorities can investigate NRIs with offshore bank accounts until they give consent for information sharing

Indian tax officials are secretly planning a silent revolt against the <keyword id="208415" type="ORGANIZATION" weightage="100" keywordseo="department-of-revenue">department of revenue</keyword> (DoR) headed by <keyword id="6377137" type="PERSON" weightage="100" keywordseo="Hasmukh-Adhia">Hasmukh Adhia</keyword>. Reportedly, the officials are not happy with the directives and functioning of Adhia, a Gujarat-cadre IAS officer and one of the most powerful bureaucrats in India. 
 It was only last week that the taxmen, including some of the senior-most officers, met in Mumbai, where they discussed DoR's alleged interference in "operational matters". They believe that this interference has "hurt the morale" of several <keyword id="141310" type="UNKNOWN" weightage="100" keywordseo="I-T-officials">I-T officials</keyword>. 
 
Also read: <a href="http://www.businessinsider.in/SRK-gets-notice-from-Income-tax-department/articleshow/53378793.cms">Income Tax department wants Shah Rukh Khan to disclose offshore investments</a> 
 
The ‘emergency meeting’ was held to discuss DoR’s efforts to undermine the autonomy of the Central Board of Direct Taxes, two officials who attended the meeting told <a href="http://economictimes.indiatimes.com/news/politics-and-nation/i-t-officers-up-in-arms-against-revenue-department-to-approach-fm-arun-jaitley-and-pmo/articleshow/53423536.cms">ET</a>. 
 
The meeting was called after an I-T officer was transferred after sending an advance tax notice on a large bank, and it was in this meeting that the officers decided to draw the attention of the finance ministry and Prime Minister's Office to DoR and its ways. 
 
"The DoR," said a senior officer from the <a href="http://www.businessinsider.in/The-Income-Tax-Department-wants-to-talk-to-your-kids/articleshow/53119207.cms">I-T department</a>, "should work as per the Government of India's Allocation of Business Rules, 1961." 
 
"But it is indulging in micro-management - in daily operations like tax assessment, transfers and postings. We have differences with revenue secretary Mr Adhia's views aired during the video conferences he holds on Saturdays," the officer added. 
 
Also read: ​<a href="http://www.businessinsider.in/Tip-of-the-iceberg-I-T-department-unearths-over-Rs-13000-crore-black-money-just-from-two-sets-of-info/articleshow/52936249.cms">Tip of the iceberg? I-T department unearths over Rs 13,000 crore black money just from two sets of info</a> 
 
<a href="http://images.financialexpress.com/2016/04/Hasmukh-Adhia-EP.jpg">Image source</a>

Income tax officials are secretly planning a revolt against the revenue department

<ul><li>Foreign investors had pulled out billions from India's equity market ever since the tax surcharge was announced in the latest budget.</li><li>The Narendra Modi government also announced a slew of measures including tax reforms to revive a sluggish economy.</li><li><keyword id="7706673" type="UNKNOWN" weightage="20" keywordseo="finance-minister-nirmala-sitharaman">Finance Minister Nirmala Sitharaman</keyword> and her team addressed a press conference to restore the faith in the economy and the government.</li><li>Reform is a continuous process, she said in her opening remarks.</li></ul>In a bid to restore the faith in the Indian economy and the Narendra Modi government, Finance Minister Nirmala Sitharaman assured the investors that the government respects wealth creators and declared that the surcharge on foreign and domestic equity investors has been rolled back. The latest budget for the financial year ending March 2020 imposed an additional tax on the country's super rich and foreign portfolio investors (FPIs) got caught in the crossfire. The subsequent anger and market sell-off has wiped off billions of rupees in share market wealth since then as foreign investors rushed for the exit. Most foreign portfolio investors in India operate as non-corporate entities such as trusts and associations, which are taxed like individuals and therefore the additional tax would fall on them. The government will lose ₹1,400 crore by rolling back the additional surcharge imposed in the latest budget. Not just the surcharge on capital gains, there are other tax reforms too All pending tax notices in India will be cleared by October 1, Finance Minister Nirmala Sitharaman declared. If any case must continue, the notice will have to renewed once again after October 1 for it to be applicable. All refunds of the goods and services tax (GST) pending so far will be cleared within the next 30 days. All future refunds will have to paid within 60 days. "Reform is a continuous process," she said in her opening remarks adding that tax scrutiny will be 'faceless' from Vijaya Dashami day, the last day of the Indian festival of Dussehra. The idea is to ensure there is no physical interface between the taxman and the assessee to avoid any harassment of the taxpayer. "We are inclined to move from the prosecution route to more humane approach. I want companies and the media to see that at no point, the intention of the government is to take the prosecution route," Sitharaman said. "Issue of IT orders -- notices, summons, etc-- will go through a centralised computer system from October 1," she said. This would mean that any tax demand will be approved by a central authority. "Any notice issued with a computer generated unique document identification (DIN) number will not be valid," she said. India moves to make home loans cheaper and easier The National Housing Board will given additional ₹20,000 crore to be further lent to housing finance company. The government will release the ₹70,000 crore to state-owned banks, which will allow for more credit and lower lending rates. The banks have also been asked to pass on every fall in the cost of funds to the consumers. The government wants people to get cheaper loans for homes and cars as demand took a nosedive in recent months. Government wants to make more money to be available for credit The government will take steps to create a credit default swap market in India in consultation with the Reserve Bank of India and the Securities and Exchange Board of India. A credit default swap (CDS) is a way for a lender to hedge against a loan turning bad. "For example, if a lender is worried that a borrower is going to <a href="https://www.investopedia.com/terms/d/default2.asp" data-type="internalLink">default</a> on a loan, the lender could use a CDS to offset or swap that risk. To swap the risk of default, the lender buys a CDS from another investor who agrees to reimburse the lender in the case the borrower defaults. Most CDS will require an ongoing <a href="https://www.investopedia.com/terms/p/premium.asp" data-type="internalLink">premium</a> payment to maintain the contract, which is like an insurance policy," according to Investopedia. The government sets up a dedicated panel to make infrastructure development faster An inter-ministerial task force will be set up to expedite the proposed government investments in infrastructure. The government had announced earlier that it would invest ₹100 lakh crore in infrastructure projects in the next five years. Automobile sector "BS-IV vehicles purchased until March 30, 2020 will be allowed to run on the roads for the duration of the registration," the Finance Minister said. Any vehicle will bought from now until March 2020 will be eligible for 30% depreciation, double that of the current rate of 15%. "That will largely benefit commercial vehicle segment. In the case of cars, only companies buying cars will benefit and that doesn't affect us," RC Bhargava, Chairman, Maruti Suzuki, the country's largest car maker told CNBC-TV18. Government departments have been told to actively replace the old vehicles. Until now, there was a ban on the government offices from retiring their old vehicles as part of a cost control initiative. The stimulus hopes to boost India's sluggish economy Indian economy has slowed down sharply leading to millions of job As many as <a href="https://www.businessinsider.in/news/a-startup-that-bets-on-packaged-keto-snacks-and-chocolates-raises-seed-funding/articleshow/70784578.cms" data-type="tilCustomLink" target="_blank">30 million jobs in the textile sector</a> and 350,000 people in the automobile sector have lost their jobs. However, the Finance Minister started her address citing the slowdown in economies around the world and highlighting that India is faring much better than many others. The minister blamed the impact of <keyword id="3987248" type="PERSON" weightage="20" keywordseo="us-china-trade-war">US-China trade war</keyword> for the current sluggishness in the economy. The slowdown in India has raised questions about the government's ability to meet its fiscal targets. However, the Finance Minister denied any pressure. "I have met tax authorities in three different places and I do not get the feeling that the tax collection targets are unrealistic," she said adding that the taxmen have been specifically told not to overreach and harass the taxpayer in a bid to meet their targets . SEE ALSO: <a href="https://www.businessinsider.in/job-cuts-at-parle-and-britannia-sales-show-indian-economy-is-in-dire-straits/articleshow/70766429.cms" data-type="tilCustomLink" target="_blank">India’s biscuit crisis shows slowdown is hurting the poor more — and job losses are making it worse</a> <a href="https://www.businessinsider.in/epfo-wont-lend-money-to-private-companies/articleshow/70785890.cms" data-type="tilCustomLink" target="_blank">Indian pension fund says it won’t lend money to private companies</a>

India unveils economic stimulus-- from homes to cars to banks to infrastructure to equity markets

Employees of the defunct <a href="http://www.businessinsider.in/searchresult.cms?query=kingfisher+airlines">Kingfisher Airlines</a> are vexed and their agony has a solid reason. Apart from not giving dues to several banks, which are now after him to pay Rs 7, 000 crore, <a href="http://www.businessinsider.in/searchresult.cms?query=VIJAY+MALLYA">Vijay Mallya</a> owes Rs 300 crore in salary to around 3000 employees. 
 Nearly 900 employees who are still employed with the <keyword id="6373962" type="CITY" weightage="20" keywordseo="Kingfisher-Airlines">Kingfisher Airlines</keyword> on paper and 2000 more who left since 2015 haven’t received their salaries. 
 
While many of the employees have changed their jobs, the ground staff, technicians and engineers are still unemployed. 
 
Irate employees had written an open letter to Mallya. “Your heart is impure and you have blood on your hands. We have so much to tell you but you won’t have patience and time to listen all that. Please do have regret and don’t set precedents dangerous to our country and aspiring entrepreneurs,” stated the employees in the open letter. 
 
READ MORE: <a href="http://www.businessinsider.in/Vijay-Mallyas-journey-from-a-businessman-to-a-fraudster/articleshow/51328653.cms">Vijay Mallya’s journey from a businessman to a fraudster</a> 
 
Many people who have changed their jobs are also facing a tough time as they are not able to get income tax refunds for the <a href="http://www.businessinsider.in/searchresult.cms?query=IT+department">I-T department</a> keeps adjusting it against tax dues which wasn't submitted by Kingfisher. 
 
Kingfisher Airlines closed its operations in 2012 due to cash and credit issues. It sank with total dues of more than $2 billion to banks, taxmen, employees, leasing companies, airports and other business associates. 
 
<a href="http://www.businessinsider.in/searchresult.cms?query=banks">Banks</a> have been chasing Mallya to get back more than Rs 7,000 crore. 
 
READ MORE: <a href="http://www.businessinsider.in/A-little-too-late-Mallya-flew-out-of-India-before-banks-could-take-a-stay-order-against-him/articleshow/51323634.cms">A little too late! Mallya flew out of India before banks could take a stay order against him</a>

‘You have blood on your hands’, employees of Kingfisher Airlines write to Mallya as he owes Rs 300 crore in salary

Taxmen conducted searches on bureaucrats in <keyword id="6357713" type="COMPANY" weightage="20" keywordseo="Uttar-Pradesh">Uttar Pradesh</keyword> and Uttarakhand and found undisclosed income worth over Rs 20 crore. Raids were conducted during the last two days against four government functionaries in these states including against a general manager of the <keyword id="490422" type="COMPANY" weightage="20" keywordseo="Uttar-Pradesh-Rajkiya-Nirman-Nigam-Ltd">Uttar Pradesh Rajkiya Nirman Nigam Ltd</keyword> (UPRNN) in Dehradun for alleged "misuse of official position" and subsequent charges of tax evasion. "Documents showing undisclosed investments in farm houses spread over hundreds of bighas and immovable properties in other cities have been seized," a senior official told PTI. Apart from income, tax officials also detected costly assets and luxury vehicles such as Range Rover, an Audi and a BMW car from the premises of the official and his family. They said the I-T teams were surprised to find 15 large LED television sets fitted in the farm house which was constructed on a land earmarked to setup a factory. A well- equipped gym, a guest house and an under-construction swimming pool were also found there. "The department is probing tax evasion to the tune of a few crores against the official and his associates based in <keyword id="47181" type="ORGANIZATION" weightage="20" keywordseo="Rishikesh">Rishikesh</keyword>," they claimed, without elaborating further. In an another search operation against a local body chairman in UP's Siddharthnagar district, the department detected tax evasion to the "tune of Rs 10 crore as per preliminary estimates." "The Chairman owns two petrol pumps and a gas agency and has been found to be allegedly diverting development grants for personal benefits," the official said. The department also raided the premises of a senior official in Noida and that of a UP road transport department officer based in Kanpur. "The Noida officer was found to have made unaccounted cash payments for purchase of immovable properties worth more than Rs 2 crore in the name of his spouse," the official said, adding he will soon be issued summons to join investigation. Investigation against the Kanpur-based officer is ongoing, the official added. The department, the official said, will undertake similar action against few more bureaucrats who are on its radar for quite sometime now. Over Rs 540 crore <keyword id="6356023" type="UNKNOWN" weightage="20" keywordseo="Black-Money">black money</keyword> has been detected by the department in the last 15 days as part of its nation-wide operations to check tax evasion. These actions come after the closure of the <keyword id="3990808" type="UNKNOWN" weightage="20" keywordseo="pradhan-mantri-garib-kalyan-yojna">Pradhan Mantri Garib Kalyan Yojna</keyword> (PMGKY) black money window on March 31. In the first fortnight of the new financial year that began on April 1, the taxman has conducted multiple search and survey operations on entry operators (agents using banking channels to launder funds), shell firms, government officials, real estate players and other sectors. As per an official data compiled till April 15, the department has carried out "over 250 searches and survey operations where the taxman raided at least 300 shell firms and detected more than Rs 540 crore of black money."

Tax officials conduct searches against bureaucrats; detect Rs 20 crore black money, luxury cars

Right from <keyword id="2583871" type="UNKNOWN" weightage="20" keywordseo="Swachch-Bharat-Abhiyaan">Swachch Bharat Abhiyaan</keyword> to <keyword id="2472340" type="UNKNOWN" weightage="20" keywordseo="Digital-India-initiative">Digital India initiative</keyword> and Make in India campaign, Indians hailed the reform that the <keyword id="6360789" type="ORGANIZATION" weightage="20" keywordseo="Modi-Government">Modi government</keyword> has initiated ever since it came to power. But it seems that business lobby of the country is losing its confidence in the Modi government, which is poised to complete one year later next month. This was revealed in a Times of India report. 
 
According to the news daily, two tweets from Harsh Mariwala, the chairman of Rs 4,600-crore Marico, narrated this story on Tuesday. In the first tweet, Mariwala said that "Sheen is falling of Modi govt in the context of promises, and gradual delivery. Need to move fast, hope interest rates are reduced today." Then, through another tweet he asserted, "Heard from a leading politician that if elections were held today NDA will barely win 200 seats in spite of weak opposition." 
 
It is not just Mariwala who is unhappy with the Modi government, but many other CEOs also come under the group of cheerless leaders. It's said that the conversation in board rooms is changing. According to a TOI report, “Captains of industry are now highlighting two new concerns, albeit in hushed tones - some of the recent notices from the taxmen and the seemingly unchecked Hindutva agenda of certain right wing groups.” 
 
Some of the business leaders are also minutely observing the attacks on churches as well as the fresh spurt of tax notices. They believe this is sending out a wrong signal to investors at a time when the government is striving hard to woo foreign investors, the financial daily stated. Harsh Goenka, RPG Group chairman, told TOI said that tax demands of such high value would invariably result in increased litigations. "As long as the issues are treated objectively and fairly, it should not worry <keyword id="46431" type="CITY" weightage="20" keywordseo="India-Inc">India Inc</keyword>. However, as a secular nation, we must avoid any form of fundamentalist activity. Random fascist comments lead to communal disharmony and should be dealt with severely," he said. 
 
A majority of CEOs also agreed that much has happened in the last few months and the Modi government is suffering from the burden of over expectations.

India Inc unhappy with Modi Govt’s ‘sluggish reforms’

<keyword id="2829070" type="UNKNOWN" weightage="20" keywordseo="While-PM">While PM</keyword> Modi is inviting global companies to come and invest in India, the epic legal battle brewing between foreign portfolio investors (FPI) and Indian tax authorities is sending wrong signals outside the country—and is thus, putting India’s reputation as a foreign-investment-friendly nation at stake. 
 As per a news report by The Economic Times, five FPIs have teamed up to challenge the applicability of minimum alternate tax (MAT) to capital gains arising from trading in stocks and bonds. The FPIs plan to file a writ petition in the <keyword id="48485" type="ORGANIZATION" weightage="20" keywordseo="Bombay-high-court">Bombay High Court</keyword> on Thursday challenging the tax demand. 
 
ET could not ascertain the names of the five FPIs and the quantum of MAT demand. However, demands ranging from Rs 1 crore to Rs 50 crore have been raised by taxmen in draft assessment orders to FPIs at the end of last month. 
 <keyword id="231315" type="POSITION" weightage="20" keywordseo="Junior-finance-minister">Junior Finance Minister</keyword> <keyword id="6357677" type="PERSON" weightage="20" keywordseo="Jayant-Sinha">Jayant Sinha</keyword> has confirmed on written that 68 notices had been sent to FPIs for payment of Rs 602.83 crore towards MAT. 
 Earlier, in a statement that had caused considerable consternation, the <keyword id="6355261" type="POSITION" weightage="20" keywordseo="Finance-minister">finance minister</keyword> had said the government could potentially collect around Rs 40,000 crore from FPIs. 
 
The news report by the financial daily reads, the dispute, which has damaged India's international reputation, flared up when the I-T department started sending notices to FPIs about six months ago asking them to pay MAT for the financial year 2011-12. Many tax experts, ET spoke to said MAT cannot be applied to an entity that doesn't have a so-called permanent establishment in the country. 
 
By March 31, assessing officers had sent draft assessment orders to FPIs asking them to pay MAT. Subsequently, demands were raised for two more years — FY10 and FY11 — in the first week of April. Indian income-tax laws allow assessing officers to go back seven years in the hunt for previous taxes. 
 During a conference call last Wednesday, <keyword id="120753" type="POSITION" weightage="20" keywordseo="revenue-secretary">Revenue Secretary</keyword> <keyword id="6359111" type="PERSON" weightage="20" keywordseo="Shaktikanta-Das">Shaktikanta Das</keyword>, Central Board of Direct Taxes (CBDT) Chairperson Anita Kapur and <keyword id="141786" type="POSITION" weightage="20" keywordseo="Minister-of-State-for-Finance">Minister of State for Finance</keyword> Jayant Sinha told investors that MAT would not be levied on funds that have invested through countries such as <keyword id="6356662" type="COUNTRY" weightage="20" keywordseo="Singapore">Singapore</keyword> and Mauritius, with whom India has double-taxation avoidance agreements (DTAAs). 
 
A day later, CBDT issued a circular instructing tax officers that decisions should be taken in "...all cases of foreign institutional investors seeking treaty benefits under the provisions of respective DTAAs, decisions may be taken on such claims within one month from the date such claim is filed". Many tax experts have dubbed this order vague since it doesn't mention the word MAT or tell tax officers what action should be taken in this regard. 
 
(Image: Reuters)

India’s reputation as foreign investment friendly nation at stake. Know why

So you love a wide spread of smoked salmon, lasagne and a glass of Champagne on your Sunday brunch menu? Now get ready to pay a bomb from July. If you don’t like the continental and want to indulge in chicken biryani and lamb rezala, you aren’t spared either. Government’s much awaited <keyword id="6354679" type="ORGANIZATION" weightage="20" keywordseo="GST">GST</keyword> (Goods and Services Tax) has brought the axe down on the business of hospitality. Both for the restaurateurs and customers, the recently declared GST rate, which would be effective from July, has resulted in devastation. Moreover, the <keyword id="6404781" type="UNKNOWN" weightage="20" keywordseo="Alcohol-ban">alcohol ban</keyword> on the highways has taken a toll on many renowned hospitality destinations and has crippled them to the core. The ludicrously high GST i.e. 18% for hotels charging Rs 2,500 to Rs 5,000 a room night and 28 % for those pegged at tariff rate of Rs 5,000-plus level and the same taxes for the <keyword id="34615" type="ORGANIZATION" weightage="20" keywordseo="restaurants">restaurants</keyword> would hinder the business like never before. Stand alone restaurants aren’t spared either. Those with air-conditions and liquor license will be charged 18% and non AC ones 12%. For the ones with less than annual turnover of Rs 5 lakh, guests will be charged 5% from July 1. Compare this to the global statistics – GST charged for hotels in Malaysia is 6%, Thailand and Singapore stand at 7% and Japan 8%. The only country that goes double digit with its GST among the competition is China at 11%. Dr. Ankur Bhatia, Executive Director, Bird Group, which runs Roseate House in Delhi Aerocity, in an <keyword id="6370284" type="ORGANIZATION" weightage="20" keywordseo="Exclusive">exclusive</keyword> interview with Business Insider said, he has lost Rs 2 crore of business in last two months of alcohol ban. Losing Rs 2 crore isn’t a nominal amount and makes us ponder how the government could have actually done it better. Hotels = Jobs At a time, when the opposition parties have raised fingers at the Modi government for the inability to provide jobs to the youth, it is to be reminded, the hospitality sector provides direct employment to 5.8 million people. And when the alcohol was banned along the highways in the restaurants and hotels, nearly 1 million jobs were curbed. Hospitality industry = skyrocketing economy Besides being an essential job creator in the country, hospitality industry has a market worth of Rs 3,09,110 crore, just below Retail and Insurance. Renowned food journalist, Sourish Bhattacharya, on his portal, fears that this high GST would deter local dhaba owners and small food joints to upgrade their businesses fearing too much taxation. At the end of the day, hospitality business is one the verge of becoming service class of the society who takes the burden of all kinds of taxations without much rebate. Why is high rate of GST horrifying? “High GST is going to seriously hurt the hospitality business because international tourists will prefer Southeast Asian destinations because of the increase in tax from the current level. India as a destination will further face challenges from inbound tourists from its neighbouring ASEAN countries. When it comes to the competition with our Asian counterparts such as Japan and Singapore where the tax is much lesser, there will be a dropdown in inbound business which will affect the economy of the country,” feels V. Jaiswal, Senior VP – Sales &amp; Marketing, Sarovar Hotels &amp; Resorts. What goes in the disadvantage of the customers is most eateries will charge 12% even if they are small just to save themselves from taxmen’s red eyes. “We continue to lose to our competitors in the international market due to these activities. Unfortunately the situation does not get any better. In any case we have infrastructural issues in the country and as you know India is a far off destination and so on and so forth. We continue to face these issues,” Dr Bhatia told Business Insider. 
	
	
	
	
	
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What motives are ailing the industry? Alcohol ban impact “Liquor sale alone accounts for 20-30% share of the total food and beverage revenue. It also impacts the revenue from the meetings, incentives, conferences and exhibitions (MICE) segment, and the room demand segment and will lead to several job losses,” added Jaiswal. When will the government understand? If alcohol ban along the highways and high GST weren’t enough, there is a high level of red tapes that tends to derail the industry anytime. “The red tape bureaucrats today make things difficult by adding onto the business cost, logistics and all other functions of a business get affected. The procedure of getting a license is too long. There are too many departments to get one license cleared thus making it time consuming and delay from the department. This leaves little room for restaurant owners to focus on actually running the restaurant,” Vikrant Batra, Owner, Cafe Delhi heights told Business Insider. Also India’s millennial city Gurugram and the state that houses it has had its fair share of bad day last quarter when the state government without any thought decided to sell liquor through one distributor across the state. In this case, Neeraj Sachdeva’s Lakeforest Wines is a clear winner having paid Rs 62.5 crore bid amount. Since then, if local restaurateurs are to be believed, the liquor prices have gone up by 59% and given rise to grey market economy. Where lies the solution? While Bhatia is positive about various business bodies taking legal steps to make the alcohol ban verdict null, Batra believes,a a single window for the entire licensing process, preferably over the internet handled by the government facilitation agencies would make things easier.

Here’s why this is the worst time to be in the business of hospitality in India

CHENNAI: <keyword id="107835" type="CITY" weightage="80" keywordseo="Nokia-India">Nokia India</keyword>, which is fighting several tax demands, fell into further turmoil after the head of its Chennai factory quit and workers alleged that they were being forced to take up an early retirement scheme. 
 
The mobile device maker, which is in trouble with taxmen over dues for royalty payments made to its parent company in Finland and allegations that it classified domestically sold units as exports, had offered a voluntary retirement scheme to its nearly 7,000 employees. 
 
“We can confirm that Prakash Katama (the factory head) is leaving the company, but will stay with us in a consultancy role for a fixed period of time,” a company spokeswoman told ET. Katama will be replaced by V Sembian, the head of product and process engineering at the unit, effective immediately, she said. 
 
Katama was appointed as the director of Nokia's Chennai facility in 2010. 
 
The company’s case against the Tamil Nadu government, which claimed that Nokia India owes it Rs 2,400 crore in taxes, came up for hearing in the Madras High Court on Tuesday. While Nokia’s counsel Arvind P Datar presented his arguments, the government counsel is likely to present his on Wednesday. 
 
Nokia, whose devices and services unit is being bought by Microsoft, is already fighting a Rs 21,000-crore claim by the income tax department over royalty payments. 
 
On Tuesday, employees at Nokia India’s facility near Chennai alleged company officials were forcing them to opt for the early retirement scheme offered last week. Nokia India’s VRS scheme comes into effect from Tuesday and is open till May 14. 
 
“They (the management) urged the employees to take up the VRS saying they would cut down transportation facilities to 40 km from 80 km,” said an employee, who did not wish to be identified. “They said they have received instructions from Finland (the parent company) to cut down the overall costs.” 
 
Nokia India provides transportation facilities to its nearly 7,000 workers, most of who are from small towns and villages near Chennai. 
 
The company denied forcing its employees. “We would like to clarify that we haven’t stopped bus or canteen facilities for our employees at Chennai factory,” the spokeswoman said. “Also, the voluntary retirement scheme is ‘voluntary’ for all factory employees.” 
 
Sources said the company has made two offers: one for permanent employees and the other for its nearly 700 trainees. Over 200 trainees have opted for the offer which will give them Rs 2 lakh as well as double the salary for the number of earned leaves, they added. 
 
“I think all the trainees will opt for this offer as they have no other choice,” said a source close to the developments at Nokia India’s factory who did not want to be identified.

Further Turmoil For Nokia India, Head Of Chennai Factory Prakash Katama Quits

As India’s new Finance Minister, <keyword id="42575" type="PERSON" weightage="60" keywordseo="Arun-Jaitley">Arun Jaitley</keyword>, took the oath of office administered by President Pranab Mukherjee, one wonders if the thought crossed his mind that one of the major problems he would be facing soon is the taxmen’s battles with foreign firms – a legacy handed down by the current President when he held the finance job. 
 <keyword id="15492" type="CITY" weightage="100" keywordseo="Vodafone">Vodafone</keyword>, IBM, Nokia and Shell are just some of the foreign majors embroiled in disputes with the Indian tax authorities. The sums involved are mindboggling –Vodafone is supposed to owe in the region of Rs 20,000 crore; Nokia has been hit with a Rs 2,400 crore tax claim; IBM has Rs 6,857 crore outstanding tax notice against it and Shell has been told it needs to pay an additional Rs 5,000 crore in taxes. 
 
Corporate chieftains around the globe, who might have been thinking about investing in the country, were made to rethink. There have been other consequences and Singapore finally overtook Mauritius as the preferred destination for foreign investors to route their money through, because the former provides better legal protection in cases involving foreign tax liabilities. 
 
For many observers, the genesis of these tax wars is the Vodafone dispute. When the Supreme Court decided in favour of the telecom major on whether it owed taxes to the Indian exchequer over its acquisition of the Indian operations of Hong Kong-based Hutchison Whampoa, the then Finance Minister Pranab Mukherjee went to the unprecedented extent of revising the tax laws to introduce a retrospective liability. 
This, at a time, when India’s most important selling pitch against its ‘bigger and better’ rival China was that the rule of law and the independence of the judiciary system prevailed in the country unlike the wheeling and dealing that happened behind the bamboo curtain in China. 
 Fast forward a few years and you found India’s economy in the doldrums – recording sub-5% <keyword id="35050" type="CITY" weightage="80" keywordseo="gdp">GDP</keyword> growth. The long-term consequences of India’s tax adventurism are certainly being felt even now. The new BJP government has two courses it can pursue. One is to introduce more clarity and transparency in laws governing areas like transfer pricing and M&amp;A, which typically bedevil foreign investments. The other is to speed up the arbitration proceedings in cases like Vodafone, which got completely tangled up in the previous government’s larger dysfunction. 
 
Unfortunately, once the precedent has been set and it has been proved that the Indian government can go to the extent of changing laws retrospectively to get its way, it could be extremely difficult to convince investors that similar instances will not take place in the future. And the same applies for the industries, especially when laws like the Land Acquisition Act was pushed through by the UPA government. It is obvious that the Pandora’s Box can easily open if governments have an agenda to pursue. 
 
Meanwhile, Prime Minister Narendra Modi inherits a fragile fiscal situation and he will have to consult with Jaitley (the latter has to present the new Budget) whether making major tax concessions is possible in the present state of government finances. 
 As the BJP must have found out during its poll campaign, it is easier to make ambitious promises in the heat of the battle, like its proposal to abolish <keyword id="6354751" type="COMPANY" weightage="100" keywordseo="Income-Tax">income tax</keyword>, than implement them when the time arrives. 
 
Maverick leaders of the BJP, such as Subramanian Swamy, who went to town against the UPA’s tax terrorism, do not find a place in the new government. Instead, Jaitley’s background as a high profile lawyer might provide just the skills he needs as he tries to untangle the legal wrangles that the policies of the previous regime has left for him to deal with. 
Image: Thinkstock

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