Removal of Retrospective Taxation Big Win for Vodafone Plc, Might Help Vi

For the unaware, the retrospective taxation law meant that companies could be taxed for their dealings in the past and this draconian and exploitative law was brought forth in the UPA II regime in India. At the time of Arun Jaitley's Finance Ministership, he had promised of revoking this law in order to lighten up the investors’ moods and to boost the Ease of Doing Business in India.

Highlights

  • Indian govt had slapped 17 cases during 2012
  • The govt lost cases with Vodafone Plc and Cairn Energy
  • Indian Govt has to pay a significant amount to Cairn Energy

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Retrospective Taxation Vodafone Idea

The investment environment in India has been put to question a lot of time given the tax laws of the country. However, on Friday one of the major question marks for the investors thinking upon India as their next investment destination evaporated in thin air as the bill passed in Lok Sabha put an end to the practice of retrospective taxation. For the unaware, the retrospective taxation law meant that companies could be taxed for their dealings in the past and this draconian and exploitative law was brought forth in the UPA II regime in India. At the time of Arun Jaitley's Finance Ministership, he had promised of revoking this law in order to lighten up the investors’ moods and to boost the Ease of Doing Business in India, which has been high on the agenda of the present government.

Vodafone Plc Wins Over Arbitration

Pradeep S Mehta, Secretary General of CUTS International, a leading global public policy think tank has also remarked saying that this is a “golden letter day” in the history of India and has also added that this move will help India in gaining more investment from companies and would help strengthen the image of the country as a possible investment location. One of the major cases which pertained to retrospective taxation was related to Vodafone Plc. A total of 17 cases were filed by the Indian Government at the time, out of which Vodafone Plc’s case was a major one in limelight. Recently, Vodafone Plc won the international arbitration on the matter, which had held up a tax demand of over $3 billion USD over the company.

Indian Govt Lost Arbitration to Cairn Energy

Now it remains to be seen, whether this would free up the worries of Vodafone Plc a little more, or even enough to pump some cash into the ailing Indian telecom business, Vodafone Idea Ltd, in which it has a 45% share. In another more recent arbitration ruling, Cairn Energy won the case against the Indian government which has ruled the centre to pay $1.2 billion-plus interest and $22.38 million towards arbitration and legal costs to Cairn. Mehta finally added that this move is a “fresh call to the global investors” that India is open for business with a favourable tax environment for businesses.

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Junior Editor

Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.

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