A few years ago, the world’s second-biggest economy of India was being hit by the most acute global economic downturn since the global financial crisis.
The country’s GDP was expected to shrink by 6.5% this year and by a further 4.5%, in 2022.
It was also one of the worlds biggest exporters of oil, gas and coal.
In 2014, the Narendra Modi government was accused of failing to fulfil the pledges it had made to address the financial crisis, which the Indian government was forced to implement to the tune of Rs 6,000 crore ($931 million) as compensation.
It has since paid tax to the UK, which has pledged to make India’s corporate tax rate at least 25% in 2019.
But since the Narendra Gandhi government came to power in 2014, a number of companies have gone public with plans to pay taxes to the British government in the UK.
The Indian companies have not revealed the precise number of their tax bills paid to the country’s foreign office in the United Kingdom, which is located in a building known as the Vauxhall Vaux-Château in the English capital.
The companies have asked for the details of the total amount paid, the number of years they have been operating in the country, the amount paid in taxes, and the nature of the benefits paid by the UK government to Indian companies in the past.
“If any of our employees were paid in cash, that would be a big concern, because it is the same amount as the annual salary,” said Sunil Sharma, managing director of Niti Aayog’s India unit.
“We have to understand the reason why the company is paying in cash,” Sharma said.
He added that the payments are made under various tax treaties that have been signed between the UK and India.
“When we are talking about payments from India to the Indian authorities, the UK has agreed to provide a subsidy for the purchase of Indian goods,” Sharma added.
Ahead of the Brexit vote, the government in Delhi said it was committed to implementing a “one-stop-shop” arrangement for Indian businesses in Britain, the biggest market for Indian exports.
But the issue of tax payments to the United States and Canada has been a contentious issue for the Modi government.
The UK and the US have both signed treaties that allow multinationals to avoid paying tax on the profits of companies in other countries.
“Our position is that if any company has paid tax, we are ready to reimburse them,” said Rajiv Kumar, deputy director of the Institute for Policy Research, a think tank based in New Delhi.
“It is the UK that has to agree to this arrangement, and if it doesn’t, then we are prepared to take action.”
The US is also paying tax to India in the form of a rebate, but the rebate is based on the countrys own economic performance and the amount of tax paid by India to other countries, which are not part of the agreement.