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Steps like retroactive tax will dampen investor sentiment: US

HT Correspondent, Hindustan Times   April 27, 2012
First Published: 22:37 IST(27/4/2012) | Last Updated: 01:23 IST(28/4/2012)

The US on Friday voiced concerns over India's proposal to empower tax authorities to inspect older corporate deals could adversely affect the domestic investment climate.


"There are also several recent policy decisions that cause significant concern and dampen sentiment about India's investment climate," said Nancy J Powell, US Ambassador to India.

" The adoption of manufacturing policies discriminatory to foreign companies and the inclusion of retroactive tax provisions in the Finance Bill are two examples," Powell said speaking at the  American Chamber of Commerce's annual general meeting. 

Finance minister Pranab Mukherjee has introduced a provision in the Finance Bill 2012, which, when voted into law by Parliament, will empower authorities to tax companies for acquiring assets in India even if the deal is concluded overseas retrospectively.

This is widely seen as a fallout of the long-running dispute between the Indian government and British telecom major Vodafone.

"I came here with a commitment to improve our trade and investment, including high tariff and non-tariff barriers, restrictions on foreign investment, lack of transparency, and defence requirements," Powell said.

On discussions between India and the US on a bilateral investment treaty (BIT), she hoped Washington's announcement of a new model BIT will provide a basis to soon launch formal negotiations.

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