New Delhi: The controversial proposal to amend the Income Tax Act with retrospective effect to bring into tax net Vodafone-Hutchison type deals is expected to yield to the exchequer Rs35,000 to Rs 40,000 crore, the government said on Tuesday.
“The Income Tax department has made an estimation that the total tax implication in consequences of retrospective amendments introduced in Finance Bill 2012 may be to the tune of Rs35,000-40,000 crore,” minister of state for finance (revenue) SS Palanimanickam told the Rajya Sabha in a written reply.
Union finance minister Pranab Mukherjee’s budget 2012 proposal, aimed at taxing Vodafone-type merger and acquisition deals involving domestic assets has generated a lot of debate, with various global bodies claiming that the move would hurt foreign investment.
Once the amendment is approved by Parliament, the British telecom giant would have to pay Rs11,000 crore as tax for its acquisition of the Hutchison’s stake in Hutchison Essar Ltd in 2007.
On the overall implications of the proposed amendment, Palanimanickam said, “The figure of Rs35,000-40,000 crore is an estimate and the exact amount is determined only when assessing officer completes assessment proceedings.”
“The proceeding before assessing officer is a quasi judicial proceedings and the name along with demand raised is determined only on completion of such proceedings.”
In a separate reply, minister of state for finance (eb&i) Namo Narain Meena said: “Foreign investors make their decisions taking into account all relevant factors and the investments are admitted into the country within the framework of the applicable laws, rules and regulations formulated to promote the country’s interest.”