Finance Bill amendment to roll back retrospective tax rule likely
Vodafone, the largest overseas corporate investor in India, has repeatedly clashed with Indian authorities over taxes since it bought Hutchison Whampoa’s local mobile business in 2007.
The government was heavily criticised by the corporate sector for introducing the tough tax rules last year at a time India was suffering a sharp economic slowdown and trying to encourage investment. Finance minister P Chidambaram has for several months been considering recommendations by a government panel that said past mergers and acquisitions should not be taxed.
Vodafone, the world’s biggest mobile operator by revenue, said in a statement last week that it had received a reminder from Indian tax authorities on the disputed tax dues, adding it believed that no tax was payable on the deal.
“The finance minister is likely to approach Parliament next month on the retrospective issue,” said a senior finance ministry official, who asked not to be identified because of the sensitivity of the issue.
He declined to say whether the government was considering a waiver of the entire tax bill or cancelling interest and penalty charges on the original tax demand.
However, the officials said Chidambaram was likely to introduce amendments in the 2013 Finance Bill to revise the amendments that were introduced last year along with the budget. Then finance minister Pranab Mukherjee introduced an
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