'Another set of brown imperialists...': Mohandas Pai says income tax oppression is enormous

Mohandas Pai, chairman at Aarin Capital, has launched a scathing attack on India's tax regime and regulatory framework, calling out what he described as decades of "regulatory oppression" under successive governments.

"After we got independence, one set of imperialists left this country, another set of brown imperialists took over in Delhi," he said while speaking at the Rising Bharat Summit in New Delhi. "They look down upon the people. We are subjects and victims of government in Delhi, in Bangalore, and other places because they think there are rulers and we are their subjects and victims."

Pai, who also served as chief financial officer of Infosys, said his 40 years in the industry had been marked by constant interference. "I've been in business 40 years. I suffered regulatory oppression all those 40 years."

The former CFO criticised the sheer scale of tax disputes plaguing the system. "The income tax oppression and tax is enormous. Today there are 30 lakh crores of tax amounts stuck up in disputes. For 15 lakh crores, cases are in court - out of which 80–85% happened in the last 5 years,” he said.

He also took aim at the NDA government's unfulfilled promises. "(Former Finance Minister Arun) Jaitley promised us in 2014 he's going to stop tax terrorism and unfortunately the finance minister has given more powers to tax authorities to oppress us than any finance minister has seen in the last 35 years,” Pai said, referring to expanded enforcement tools in the proposed tax code.

Pai raised serious concerns about new sections — 247, 246, and 248 — that allow tax authorities to access digital devices. "It can break into a social network, break into digital and do it willingly which is coming in the new bill, which we should fight out. That is an oppressive surveillance piece given to people," he said.

He flagged a lack of transparency built into these powers. "The law says that an officer should have reason to believe that there is some tax evasion and he goes to a person who signs off who has the reason to suspect—both internal—and then the reason to believe and the reason to suspect shall not be disclosed to any authority, any person or any tribunal."

Pai questioned the yield from such aggressive enforcement. "In the last four years, we collected 75 lakh crores of direct taxes. How much is the black money they found out? How much is the tax they collected for black money — Rs 20,000, 30,000, 40,000 crores?"

He recalled the prolonged Angel Tax issue, describing multiple meetings with the Prime Minister's Office and finance officials. "Every time they change a law, they give more powers because the political establishment is very weak. It does not look at all this."

Pai also took a swipe at the Reserve Bank of India. "RBI, the people in Mint Street, think that the only people saving this country from all the marauders outside who want to take away India's foreign exchange and everybody's a crook in this country except them."

He concluded with a demand to end arbitrary rules. "This regulation should stop and retrospective tax amendment should stop, like this indexation benefit is taken away as retrospective—it should stop."