‘Tax terrorism’ severely hurting India’s economic growth
New Delhi: The death of entrepreneur V G Siddhartha has brought to limelight the unwarranted and unending pressure being exerted by government authorities of late on corporates in the name of probing tax evasion.
The dramatic disappearance of Cafe Coffee Day (CCD) founder Siddhartha under mysterious circumstances on Monday night and the subsequent discovery of his body in the backwaters of Netravathi river near Karnataka’s Mangaluru coast on early Wednesday have sent shock waves in the corporate world, as he was an expert in brewing an empire, which ironically took a toll on his life at the age of 60.
Industry honchos and experts are of the view that the very method of crackdown on tax evasion has not only proven futile, but also hampered entrepreneurship and the overall economic scenario in the country.
Chairman of Manipal Global Education and former Infosys Director Mohandas Pai has said that the tax justice system is “broken” in India and the Prime Minister and the Finance Minister should be asked to intervene and handle the scenario.
Kiran Mazumdar Shaw, Managing Director of Biocon, told a news channel: “India has moved from Licence Raj to Inspector Raj. There is an effort to clean India Inc, but the pendulum cannot swing from one extreme to the other. The government needs to exchange with honest businessmen.”
Shaw on Tuesday also retweeted a tweet by one Rajiv Mantri which said: “Highest interest rates in the world, usurious income tax rates, triple tax on dividend, tax on buy back, tax on securities transactions, progressive taxation with GST. And then we are surprised, what killed sentiment, what destroyed animal spirits.”
The sentiments among the corporates seem to be very subdued and negative with regard to the economic and tax scenario in the country.
The whole issue came to light after Siddhartha’s letter to his comapny’s board became public, which said: “I am very sorry to let down all the people that put their trust in me. I fought for a long time but today I gave up as I could not take any more pressure from one of the private equity partners forcing me to buy back shares, a transaction I had partially completed six months ago by borrowing a large sum of money from a friend.”
As support poured in for Siddhartha, fugitive businessman Vijay Mallya too pitched in with his words of condolence as he correlated the CCD chief’s situation with his own.
“I am indirectly related to VG Siddhartha. Excellent human and brilliant entrepreneur. I am devastated with the contents of his letter. The Govt Agencies and Banks can drive anyone to despair. See what they are doing to me despite offer of full repayment. Vicious and unrelenting,” Mallya tweeted on Wednesday.
“In Western Countries, Government and Banks help borrowers repay their debts. In my case they are obstructing every possible effort for me to repay my debt whilst competing for my assets. As far as the prima facie criminal case goes wait for the appeal granted,” Mallya said in another tweet.
As several crackdowns have taken place in the last few months with the government taking a tough stand on any form of tax evasion, the unwarranted and continuous pressure on several corporates actually goes against the government’s own philosophy of “ease of doing business”, eventually hurting the industry and the cycle of job creation.