Several global business associations have sought reconsideration of the retrospective amendment of the Income Tax Act in the backdrop of Vodafone controversy warning that the proposed change has prompted widespread review of costs and benefits of investing in India.
"If the tax law changes are made, they should not apply retroactively.
"Past court decisions must stand despite subsequent legislation", global business chambers, including Confederation of British Industry, US Council for International Business and Japan Foreign Trade Council said in a letter to Prime Minister Manmohan Singh.
These associations claim to be representing interest of 250,000 companies world wide.
Justifying the government's move to amend the IT Act with retrospective effect to bring into net the Vodafone-type
merger and acquisition deals involving domestic assets, Finance Minister Pranab Mukherjee had said in Parliament last week that "India is not a no tax country. . .India has a determined tax rate but it is not a tax haven."
The global associations said, "The most prominent of the judgements that the proposals appear designed to reverse is the very recent Supreme Court ruling in the Vodafone case, holding that it is a well-established principle of Indian law that an overseas transaction cannot be taxed in India even it it has the indirect effect of changing control of a company in India."
The letter was also forwarded to Mukherjee, Law Minister Salman Khurshid and Commerce and Industry Ministry Anand Sharma.
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Several global business associations have sought reconsideration of the retrospective amendment of the Income Tax Act in the backdrop of Vodafone controversy warning that the proposed change has prompted widespread review of costs and benefits of investing in India.