The FINANCIAL — U.K. Chancellor of Exchequer George Osborne Monday raised New Delhi's move to retrospectively tax overseas transactions through a change in law during a meeting with Indian Finance Minister Pranab Mukherjee, a top government official said.
The U.K. government has said that investors are "anxious" because of the retrospective change in the tax law, the Indian official, who didn't wish to be named, told reporters.
Mukherjee, in the government's annual budget in March, proposed to tax any overseas transaction dating back to 1962 in which an underlying Indian asset was transferred. The move could create several problems for foreign companies that are seeking to do, or have done, deals involving Indian companies.
According to Borsa Italiana – London Stock Exchange Group, the proposed change in law came after the Supreme Court of India ruled in favor of Vodafone Group PLC in a suit filed by the government seeking more than $2 billion in taxes on its $11.2 billion acquisition of a controlling stake in a local mobile operator from Hong Kong's Hutchison Whampoa Ltd.
The official said that India has stuck to the proposed change, saying it followed a direction from the apex court, which had asked the government to clarify its stand on taxing such deals.