New Delhi: India's Finance Minister Pranab Mukherjee has sought to allay concerns of foreign investors in United States over a controversial proposal to retrospectively amend a tax law dating back to 1962 on overseas transactions involving the transfer of Indian assets into foreign companies, saying the fears are misplaced, media reports said.
"There is some sense of despondency amongst a section of USA. Businessmen, particularly because of their apprehension -- and I would say misapprehension -- about certain legislative amendments which we have proposed," the Reuters quoted Mukherjee as saying in Washington.
Mukherjee further said that no case older than six years will be opened as per the existing constitutional provision.
"Would the income tax cases be reopened from 1962? The answer is no... No case can be reopened which is more than six years old.. There is no uncertainty," Mukherjee said, adding that India will hold fair and open discussions with those having objection against the proposed law.
The Indian government, in the Union Budget 2012-13 announced earlier March, proposed a clarification in tax rules to bring under the tax net all cross-border mergers and acquisition deals involving Indian assets or businesses, with effect from 1962 when the rules were written.
The change in rules will bring back the UK-based telecommunication giant Vodafone under the tax net over its $11-billion purchase of Hutchison group's Indian operations in 2007.
Notably, several international trade groups representing over 250,000 firms had voiced their concerns over the proposal to Prime Minister Manmohan Singh in a letter, saying the move may lead global companies to rethink investing in India.
Even the United Kingdom's Chancellor of Exchequer George Osborne, on his visit to India recently, raised this issue with Mukherjee, while Mukherjee is said to have justified his ministry's decision to clarify tax rules with retrospective effect.
The Indian Parliament is expected to consider the Finance Bill 2012, including the proposal to retrospectively amend the tax law, on May 7.