Decision to amend Income Tax law retrospectively regrettable

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The then Finance Minister Pranab Mukherjee’s decision to amend the Income Tax Act with retrospective effect to negate a Supreme Court verdict was regrettable, former Planning Commission deputy chairman Montek Singh Ahluwalia said today.

“On Vodafone tax issue, Pranab Mukherjee’s decision was very regrettable… Retrospective taxes have been done in many countries. I think where we suffer was that people saw this tax that has been put in place to explicitly counter judgement of Supreme Court that, I mean, was regrettable,” Ahluwalia said at the India Today Conclave here.

Last month, the Income Tax department issued a reminder notice to Vodafone over its Rs 14,200 crore tax dues, a move which the UK firm said showed disconnect with Prime Minister Narendra Modi’s promise of a tax-friendly environment.

The government, however, had defended it saying the step was a routine exercise.

The Vodafone case relates to the retrospective amendment of the I-T laws carried out by the UPA government in 2012 to overturn the Supreme Court verdict, which had favoured Vodafone.

The basic tax demand for Vodafone was Rs 7,990 crore.

On the problem of rising bad loans, Montek Singh Ahluwalia said if government equity in Public Sector Banks was not reduced below 51 per cent, their problem of rising NPAs cannot be solved.

“We need to make bank more board driven by reducing government’s ownership in Public Sector Banks below 51 per cent,” he said.

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