Bela Mao, head of India tax, Shell
"It sends out a message that legislature is above the judiciary which is a very worrying development not only from a perspective of interpretation of tax laws but more generally on how it can impact the very foundation of democracy in India. Such situations are definitely unsettling to a taxpayer as it introduces a very high level of uncertainty on tax positions adopted for India."
RN Dash, ex-Director General for International Tax, Indian Ministry of Finance
"The ministerasserted Parliament''s right to amending clarifications of tax laws retrospectively keeping in view legislative intent. Clearly such amendments are constitutionally valid and they do not bring up results that can ever be termed as absurd. During my days in Tax Policy Division of the Ministry of Finance, we also drafted retrospective amendments of similar nature. The British Parliament also passed retrospective legislation in 1987. Certainly, these amendments can be challenged in courts in due course but have little chance of being declared void being tempered by a proposed beneficial circular by the Tax Administration and the target group of taxpayers beingin a category trying to avoid paying tax anywhere in the world.
Navin Jain, head of tax and treasury, Cairn Energy
"Retroactive amendments are detrimental to the investment climate. Though corporates may continue to invest in India as an emerging market, their dependence on India may reduce depending on how much risk they want to take. The retroactive amendement is not fair since the Supreme Court ruled that internationally indirect transfers are not taxable (Vodafone being first case of its kind). Also, the message to taxpayer seems to be pay tax and do not litigate. A prospective amendment would have been a wiser decision."
Uday Ved, head of India tax, KPMG
"Whereas the legislature is perfectly within its rights to tax a particular transaction or income going forward, it is not conducive to investment climate by amending the law with retroactive basis. It creates uncertainty and instability among investors. The silver lining is that the finance minister has announced that in those cases where assessments have already been finalised, the same will not be reopened. Thus retrospective amendments will apply to pending cases and could increase tax litigation in the country."
Sudhir Kapadia, head of India tax, Ernst & Young
"In my view, except in exceptional circumstances, it is not desirable tax policy to impose tax obligations with the benefit of hindsight on hapless taxpayers in a wide variety of situations. Tax administration and legislature alike should exercise this constitutional right with a great deal of circumspection and only in those situations where a clear intent of the law has been defeated by actions taken by taxpayers and upheld by judiciary."
Amit Singhania, principal associate, Amarchand & Mangaldas & Suresh A. Shroff & Co
"If one were to knock the doors of the Supreme Court on the pretext that these amendments are unconstitutional on account of its retrospectivity, in my view the likelihood of getting it struck down is quite insignificant. However, the other aspects such as extraterritorial nature, etc can be evaluated for contesting in the court."
Sunil Jain, partner, J Sagar Associates
"While replying to the debate in Parliament on Finance Bill 2012, the finance minister has asserted that India is not a tax haven and cannot accept a situation of double non-taxation merely to attract foreign investments. It seems that Vodafone and other similar tax controversies may have a long battle in front of them."
Sudhir Nayak, partner, Sudit K Parekh & Co
"It is an interesting aspect that the amendments in the Finance Bill 2012 seemingly overrule more than 20 past rulings of the various appellate authorities and courts. While this might seem like a worrying development for the taxpayers and investor community, it is noteworthy that this development of retrospective amendments overruling judicial precedents is far from recent. However, one would also need to wonder on whether in the current economic environment, the Indian government can afford to adopt policies which could alienate the global investor community."
