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NEW DELHI, July 16

THE Government is committed to improving the tax regime to bolster investment and to create an economic climate in the country, according to the Finance Minister, Mr Jaswant Singh.

Although the Government had taken several steps to simplify the tax structure and to ensure compliance, the system was still complex, Mr Singh told the Rajya Sabha on Tuesday.

A reflection of this was in the tax payers' figure where, in a country of one billion, only 25 million were tax payers.

Mr Singh said an improved economic climate would result in domestic savings going up.

Shortly after taking over as Finance Minister, Mr Singh is reported to have told the Revenue Department that as a tax payer he himself found the simplifed tax return form - Saral - complicated.

No Mauritius probe: Mr Singh rejected the demand of the CPI(M) MP, Mr Nilotpal Basu, for a comprehensive inquiry into the misuse of the Indo-Mauritius Double Taxation Treaty by Indian business houses.

"The Government was awake to any aspect of illegality regarding the treaty,'' Mr Singh said during Question Hour. He held that it would not be proper for him to comment on the internal legislation of a friendly neighbouring country.

Mr Basu had alleged that Indian business houses were misusing the double taxation treaty to obtain unjustified tax benefits on their investments. Many industrial houses were using hawala and the Mauritius route to extract tax benefits. The money flowing into the country was not really FDI, but investment by Indian business houses, he said.

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