Trade bodies urge Indian PM to reconsider changes to Income Tax Act
Several global trade bodies have urged the Prime Minister of India, Manmohan Singh to review the proposed changes to the Income Tax Act amid growing concerns that the changes will through open the Vodafone taxation case again.
Finance Minister Pranab Mukherjee is backing the proposed changes to the Income Tax Act with retrospective effect, which could once again open the Vodafone tax case making company liable to pay about Rs 11,000 crore as tax for an acquisition deal.
"If the tax law changes are made, they should not apply retroactively. Past court decisions must stand despite subsequent legislation", global business chambers including Confederation of British Industry, U. S. Council for International Business and Japan Foreign Trade Council said in a letter to Prime Minister Manmohan Singh.
Vodafone Group is planning its move over the tax claims as the government moves to change laws that will make the company liable to pay more than $2 billion in taxes.
The country's highest court has said in a ruling that the British telecom giant has no dues to pay to the Indian taxation authorities. The company's court victory in a case, lasting more than four years, came as the Supreme Court dismissed the government's demand for $2.2 billion in taxes from Vodafone for its acquisition of Hutchison Whampoa Ltd's India operations in 2007.
A Vodafone spokesman has said that the changes proposed by the government aims to apply tax liabilities on a retrospective basis, something that did not exist in the India law at the time if the acquisition of Hutchison's share in the India based telecom operations.