The government on Saturday placed in Parliament’s court the issue of the proposed controversial change in an Income Tax law, which seeks to impose taxes on deals such as telecom giant Vodafone’s acquisition of Hutchison Essar in 2007.
Law minister Salman Khurshid said the issue of amending the I-T Act, 1961, is a part of the finance bill, and will be taken up by Parliament in the first week of May.
Finance minister Pranab Mukherjee has proposed amendments in the five-decade-old I-T Act, seeking to retrospectively tax cross-border transactions involving domestic assets. The move is estimated to yield funds amounting to Rs 35,000- Rs 40,000 crore for the exchequer.
The government decided to amend the law following a January 20 judgment of the Supreme Court, which had ruled that Vodafone was not liable to pay taxes for acquiring Hutchison’s stake in Hutchison-Essar.
The top court had also dismissed the government’s review petition against its verdict on March 20, following which Vodafone served a “dispute notice” to the government, considered the first step before it began international arbitration proceedings under the India-Netherlands Bilateral Investment Treaty (BIT).
Khurshid said the government is analysing the notice. “The finance minister will take a call on the matter,” he said.
The notice, served by Vodafone’s Dutch unit, states that India is violating “international legal protections granted to it (Vodafone) and other international investors” through the proposed change.