Budget 2014: Move for no more retrospective amendments welcome, says Girish Vanvari

The Union Finance Minister Arun Jaitley in his budget speech said the government will not change rules on retrospective taxation. The BJP manifesto had referred to the party's intention to do away with "tax terrorism", presumably referring to aggressive tax enforcement.

The Finance Minister in this regard hoped that foreign companies will appreciate the move on retrospective taxation.

Whilst a commitment to no more retrospective amendments and a stable tax regime is a much needed welcome move to bolster investor confidence, how the pre 2012 case already opened up be dealt with will be the key, according to Girish Vanvari, Co Head of Tax, KPMG in India. "It will be interesting to see where the existing litigation folds," he said.

On the fiscal deficit the Finance minister had earlier announced that the country would stick to the previous government's fiscal deficit target of 4.1 percent of gross domestic product for the year ending in March 2015, but in the speech said the target stood at 4.5 per cent.

"Whilst a budgeted fiscal deficit of around 4.1% in 2014-15 is around expected line, the good news is the roadmap to get it down to 3 per cent in a phased manner over the next two years," said Vanvari, adding that the key watch point will be buoyancy of tax collections and other non tax revenues especially in the back drop of a GDP projection of 5.4 to 5.9% for 2014-15.