Retro tax decision nothing new: Khurshid
"We have noted this. You must be aware that these are difficult decisions. The Finance Minister would have thought deeply before he took the decision," Law Minister Salman Khurshid said when asked about the proposal to slap Rs 11,000 crore tax on Vodafone for its 2007 Hutchison-Essar deal.
Britain`s Chancellor of the Exchequer George Osborne is understood to have highlighted the anxiety amongst the UK investors on the proposed amendment of the I-T Act during his meeting with Mukherjee on Monday.
Khurshid maintained such proposals were not "completely unprecedented". "Clearly, a lot of people look surprised about the retrospective legislation in revenue matters. This is not something new. We have experimented this in the past also and the Supreme Court and High Courts have upheld it from time to time," he said.
"In terms of investment climate, in terms of implications, the Finance Minister must have thought it through very carefully," he said.
On reactions to the proposal, he said "frankly, you should be asking him (Mukherjee) and I am sure he would want to reflect on this and get back to you."
The issue relates to the Supreme Court order which set aside the Bombay High Court ruling that had asked Vodafone Holdings to pay Rs 11,000 crore in tax as a result of acquiring Hutchinson-Essar Ltd in 2007 in an overseas deal.
In order to deal with the situation following the Court ruling, Mukherjee in the Union Budget proposed to amend the Income Tax Act with retrospective effect from 1962 to bring into the tax net overseas deals concerning domestic assets.