India Moving Towards Tax-Friendly Regime; Black Money Laws Need to be Changed, says Arun Jaitley

In an effort to rectify India's reputation which has taken a beating over the years, Finance Minister Arun Jaitley on Thursday said that India was moving towards a tax-friendly regime. The move is aimed at improving the investment climate in the country, said Jaitley.

"Our tax system has to be friendly with tax payers and that is what we are trying to do step by step," he said, referring to the black money debate in the Lok Sabha.

While advocating a tax structure which discourages evasion, Jaitley said that there was a misconception about high tax rates leading to higher revenues, reports India Today.

"High tax rates do not necessarily mean more revenue collection... The direct and indirect tax rates have to be brought to reasonable level so that the basket increases and there is no incentive for evasion," he said, adding that the government should not lose out on revenue.

"Those who have to pay taxes must pay taxes. Those who do not have to pay taxes, merely by raising demands does not serve purpose as they get stuck up in courts... We cannot allow tax evasion or avoidance," said India's finance minister.

He also said that there was a time when the tax rates in India were pretty high and the country's growth rate was mocked at as the "Hindu rate of growth."

"In the last few years as an economy we got a bad name from the world of investment that you are not tax-friendly regime," said Jaitley.

He also hinted at changing the laws on dealing with black money as the current ones consisted of a few loopholes, adding that the government would have to do so carefully since pushing for an immediate disclosure of names would play into the hands of the black money account holders.