Britain on Monday criticised India’s plan to empower taxmen to scrutinise even 50-year-old deals, cautioning that this could dent the nation’s image as an investment hotspot because it made it difficult for companies to predict risks. However, finance minister Pranab Mukherjee cited instances including those in the UK to defend India’s case in imposing retrospective tax law changes.
Visiting British finance minister George Osborne raised the issue with Mukherjee on Monday. “The British finance minister said retrospective tax amendments can potentially impact investments in India.”
“He underlined that Vodafone has brought in large investments to India,” an Indian government official told HT.
Mukherjee introduced a provision in the Finance Bill 2012 seeking to empower authorities to tax companies for acquiring assets in India even if the deal is concluded overseas, retrospectively from April 1, 1962. This is widely seen as a fallout of the long-running dispute between the government and British telecom giant Vodafone.
Mukherjee cited several instances, including those in Britain, where retrospective amendments have been carried out.