Vodafone issues notice to India over tax proposal

New Delhi: Vodafone has issued a notice to the Indian government under Bilateral Investment Protection Treaty over retrospective tax proposal announced by Finance Minister Pranab Mukherjee in the Union Budget 2012-13. The company says the proposal in the budget to tax transactions with retrospective effect amounts to denial of justice.

Calling the proposal a breach of obligation under the bilateral investment treaty, it has asked the Indian Government to abandon or amend the retrospective proposal in the Finance Bill.

Earlier, India said that the move to amend the Income Tax act retrospectively is not Vodafone-specific. "The clarificatory amendment is retrospective in character and it was not Vodofone-specific. I don't see, in any manner, the investment climate will be hurt," Commerce and Industry Minister Anand Sharma said.

It says the proposal in the budget to tax transactions with retrospective effect amounts to a denial of justice.

"India remains one of the best investment destinations. Returns on investment in India is the highest in the world," he added.

UK-based mobile operator Vodafone purchased Hong Kong-based Hutchison's telecom business, which included operations in India, in 2007 for about $11.2 billion.

Indian income tax authorities said the deal will attract tax on it and sought Rs 11,000 crore from Vodafone, which challenged the move.

The Supreme Court ruling held that Vodafone wasn't liable to pay tax on the deal, following which the government has proposed to amend the tax laws retrospectively to bring in the net such deals.

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