With an aim of improving the environment for investments, India is moving towards a tax friendly regime to correct the image which had become "bad" over the years, Finance Minister Arun Jaitley said.
"Our tax system has to be friendly with tax payers and that is what we are trying to do step by step," he said, replying to a debate on black money in the Lok Sabha.
Advocating a tax structure which discourages evasion, he said there was a misconception that high tax rates lead to higher revenues.
"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," Jaitley said.
The government, he said, should not lose out of revenues. "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," Jaitley said.
He further said there was a time when India had very high tax rates and the country's growth rate was mocked at as "Hindu rate of growth".
Referring to the steps being taken by the government to unearth black money, Jaitley said government has identified 427 account holders associated with HSBC list and efforts are on to complete tax assessment by March 31, 2015.
He also said prosecution has already been launched in several cases, cases would be filed every week, and names would become public.
"When media comes to know it will note that there are influential people in the list (of foreign account holders)," Jaitley said.
Members of Congress and TMC staged a walkout saying they were not satisfied with the Minister's reply.
Jaitley said, "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".
While giving an overview about the treaties India has signed with various countries to deal with the black money, the Finance Minister hinted at changing laws as he noted there was some weaknesses in them.
"I admit that there is a weakness in law. If the black money stashed abroad has to come, how will it come? Even the SIT is worried about this," Jaitley said, while answering question as to how soon the black money could be brought back.
Asserting that the government would have to move carefully, he said that those pushing for immediate disclosure of names would be helping black money account holders as they will get alerted.
"Some account holders have already withdrawn money (from offshore illegal accounts)... We necessarily do not need to show bravado and adventurism," he said, while replying to Mulayam Singh who wanted to know if there was still money in those accounts.
He made the mention about withdrawal of money with regard to 18 illegal accounts in Lichenstein.
Asserting that government will not rest till the last account is disclosed, he said, "We are on right legal path... They (Black money holders) will be punished and forced to bring money back in the country."
Jaitley said if the government falters and make a hasty disclosure, "I will not get any evidence and the account holder will have the last laugh."
