British Finance Minister George Osborne on Monday said the Indian government's proposal to change tax laws retrospectively will damage its investment climate, reports said.
Finance Minister Mukherjee Pranab Mukherjee
in the Budget
proposed to amend the Income Tax Act with retrospective effect from 1962 to bring into the net overseas deals concerning domestic assets.
Earlier, the Supreme Court
had set aside the Bombay High Court ruling that had asked London-headquartered Vodafone Holdings
to pay Rs 11,000 crore in tax as a result of acquiring Hutchinson-Essar Ltd in 2007 in an overseas deal.
Many global business chambers, including Confederation of British Industry
, have also sought reconsideration of the proposed retrospective amendment of the Income Tax Act.
These associations claim to be representing interest of 2.5 lakh companies world wide.
In a letter to Prime Minister Manmohan Singh, these business associations said, ""If the tax law changes are made, they should not apply retroactively. Past court decisions must stand despite subsequent legislation."
In their letter, the global trade bodies also warned that some global companies have already started to re-evaluate their investment plans because of the uncertainty looming over the country's tax laws.