The bullet train project in India is already progressing slowly. But now another hurdle has come in this regarding tax. Japanese Ambassador to India Suzuki Satoshi has written a letter to Finance Minister Nirmala Sitharaman calling for an end to the impasse. They have expressed concern that if this is not addressed, the issue will negatively impact all projects sanctioned under Japanese grants. Apart from this, there will be further delay in the bullet train project.
In fact, the prestigious bullet train project is facing a hurdle regarding income tax. The Japanese side, which is a participant in the project, has said that it may be delayed if income tax provisions are not exempted. The Japanese side has also informed the Government that the reimbursement option will not be possible as the consultancy companies under consideration are small in size and do not have such a pool of funds to meet the expenses.
According to the Japanese side, other projects to be affected under the JICA grant include improving power supply in the Andaman and Nicobar Islands and an advanced traffic information and management system in Bengaluru, which is a strategically important project for both the countries. Japan has agreed on the reimbursement principle for these two projects, but has said it is not acceptable for the bullet train project as it is a large project.
Japan is seeking an assurance from Finance Minister Nirmala Sitharaman to prepay income tax and related charges to consultancy firms as early as possible. Satoshi said in the letter that, “We have to recognize that these costs cannot be covered by the grant-in-aid from JICA. I am concerned about this situation as it will have a negative impact on the Mumbai-Ahmedabad High Speed Rail project.”
The Embassy of Japan did not respond to calls and emails on the issue. Indian Railways officials, speaking on condition of anonymity, told The Sunday Express that it was trying to see how the matter could be better addressed.