Montek says Vodafone issue under discussion, hopes for solution

Dy Chairman of Plan Panel says retro tax amendments have been wrongly interpreted

Deputy chairman of Planning Commission Montek Singh Ahluwalia today said that the tax imbroglio concerning British telecom major Vodafone Plc is under serious discussion and there could be a solution soon.
 
“I am aware of the situation (on Vodafone). There are discussions going on the issue, which I am not privy to but I hope there will solution to it soon,” Ahluwalia told here today while addressing ‘The Growth Net’ seminar organised by the Aspen Institute.
 
Vodafone, the largest investor in India so far in the corporate sector, has been in constant struggle with Indian tax authorities ever since it bought Hutchison Whampoa's local mobile business in 2007 for around $11 billion.

 

Answering to a specific query on the retrospective tax amendments, Ahluwalia said, this has been “wrongly interpreted as signalling by the government” and that many countries do have retrospective tax but there is a realization there this is used only in rare case scenario.
 
“The finance minister has made it quite clear the air this time on the GAAR (General Anti-Avoidance Rules) issue and I am sure he will do the same on retrospective tax laws too. Vodafone is one case that got affected. Nobody else got affected due to this.”
 
He also said many doubts will be cleared with finance minister P Chidambaram’s reply to the finance bill.

 
Ahluwalia also went on to say that introduction of retrospective tax laws attracted negative sentiments because it was introduced at a time when India needed foreign investment the most.
 
“Had it been introduced at a time when India was making 9-9.5 per cent growth then the issue would not have grown so much out of proportion.”