Government to amend law to tax Vodafone-type dealsMarch 16th, 2012 - 10:07 pm ICT by IANS
New Delhi, March 16 (IANS) The Indian government Friday proposed to amend the Income Tax Act to tax all overseas transactions involving domestic assets.
The proposed change would be retroactive to April 1, 1962, according to the 2012-13 budget documents tabled by Finance Minister Pranab Mukherjee.
Under the amendment, resident and non-resident companies alike would be required to deduct tax and pay it to the Indian government if a merger involved an Indian asset even if the transaction was carried out on foreign soil.
The proposal follows a Rs.11,218 crore ($2.2 billion) tax dispute case the government lost in the Supreme Court against British mobile phone firm Vodafone Plc in January.
In response, the telecom service provider said it has faith in the Indian judicial system and is confident that the change in tax law would not have any impact on the Supreme Court’s verdict.
“We are examining this proposed decision with our lawyers, but we do not believe this retrospective change in tax law should have any impact on the final judgment handed down by the Supreme Court in our tax case,” Vodafone said in a statement.
“We continue to have faith in the Indian judicial system,” it added.
The case involved a levy on a 2007 transaction in which Vodafone had paid $11.2 billion to Hong Kong-based Hutchison for acquiring a 67-percent stake in Indian telecom services major Hutch Essar.
The Supreme Court had ruled in favour of Vodafone saying that Indian tax officials did not have jurisdiction over a deal between two global companies even if assets involved in that deal were located in India.
If the amendment is carried out, experts said, several foreign investments would be open to taxation.
- Government plea on Vodafone tax verdict dismissed (Second Lead) - Mar 20, 2012
- Government seeks review of Supreme Court's Vodafone verdict - Feb 17, 2012
- Government seeks review of Supreme Court's Vodafone verdict (Lead) - Feb 18, 2012
- Dissapointed Vodafone to take steps to safeguard interest - May 09, 2012
- Government's plea for Vodafone verdict review dismissed (Lead) - Mar 20, 2012
- Supreme Court dismisses petition in Vodafone case - Mar 02, 2012
- India's apex court saves Vodafone $2.2-bn tax burden (Roundup) - Jan 20, 2012
- Apex court dismisses lawyer's petition in Vodafone case (Lead) - Mar 02, 2012
- Proposed tax law change 'clarificatory', says Pranab - Apr 20, 2012
- Tax law change may yield Rs.40,000 crore: Government - Apr 24, 2012
- Vodafone welcomes apex court's decision in tax case - Jan 20, 2012
- Vodanfone issue: HSBC seeks 'tax clarity' from government - Apr 12, 2012
- Vodafone was told about tax liability in Hutchison deal - May 02, 2012
- Vodafone tax verdict to impact on similar merger deals: experts - Jan 20, 2012
- Vodafone plea denied as Mukherjee says 'India no tax haven' - May 08, 2012
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