Thaindian News

Kolkata, April 12 (IANS) HSBC, Europe’s biggest bank, Thursday sought “tax clarity” from the government in the backdrop of Finance Minister Pranab Mukherjee’s statement there was “no other way” but to amend the Income Tax Act to bring into the net Vodfone-type cross-border deals.

The government’s move to retrospectively tax overseas transactions “clearly opens up debate…The Vodafone issue is really more to clarify,” Naina Lal Kidwai, Country Head India, Director HSBC Asia Pacific, told reporters here.

“I think the problem for the future is tax clarity…all investors want tax clarity,” Kidwai stated.

Earlier, two international trade bodies, International Chamber of Commerce and the Business and Industry Advisory Committee to the OECD, have sought a review of the government’s move to retrospectively tax overseas transactions involving Indian assets. They have together written to the finance ministry, cautioning that the government’s proposal in the budget for 2012-13 could have adverse implications for the country.

“The whole noise that is happening, is not happening because of Vodafone…it is happening because of retrospective regulations,” Kidwai said.

She said the concern for the Indian industry was the power that the government was going to entrust to tax assessment officers.

“In order to raise the revenue, the government should not end up causing problem (for industry),” she said.

The finance minister had recently said there is “no other way” but to amend the Income Tax Act with retrospective effect to bring into the net Vodfone-type cross-border deals.

Mukherjee in his 2012-13 budget has proposed to amend the 1962 Income Tax Act with retrospective effect, a move that evoked a sharp reaction from Vodafone, which said any move by the government to retrospectively change the tax regime was grossly unjust. It said the proposed change contradicted the conclusions of the Supreme Court on the issue.

The apex court had held that Vodafone was not liable to pay Rs.11,000 crore as tax on its $11.2 billion acquisition of 67 percent stake in Hutchisson Essar from Hong Kong-based Hutchison Telecom as the deal was done between two foreign entities overseas.