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'Foreign Investors Apprehensive About Retrospective Tax Demands'

Wednesday, April 29, 2015
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NEW DELHI: With the Delhi High Court to resume hearing on the Rs.20.495 crore tax case slapped on Cairn India, experts voiced the apprehensions of foreign investors about an adversarial tax regime.

"Foreign investors expect stability and clarity in tax policy, which has been coming from the top with the prime minister's Make in India initiative for ease of doing business and the finance minister's statements on no retrospective taxation," senior apex court advocate Gopal Jain told IANS.

"However, policy should trickle down to the ground level, where there is a big gap in ground reality and companies are being served retrospective tax notices.

"Investors, who otherwise have multiple choice of destinations, look at government's commitment to exorcise ghosts of the past," he added.

Cairn India in its petition had sought the quashing of the tax demand, as it felt there was an undue delay in initiating the proceedings -- a lapse of over six years.

The demand is for alleged failure by Cairn India, a part of the Vedanta Group, to deduct a withholding tax on capital gains that arose when it was acquired from the parent company in Britain in 2006-07.

The Rs.20,495 crore tax demand comprises Rs.10,248 crore tax and Rs.10,247 crore interest.

Among other foreign investors embroiled in tax disputes with the government are Nokia, Vodafone, and Mondelez International for total claims of about $10 billion.

Another tax controversy erupted earlier this month with foreign institutional investors (FIIs) over demands for $95 million on past capital gains.
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Source: IANS

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