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Generally, Retrospective Amendments Should Be Avoided, Says Montek

New Delhi, Mar 18: Plan panel Deputy Chairman Montek Singh Ahluwalia today said that generally changes to the laws should not be implemented retrospectively even as he termed the proposed amendment to the I-T Act

PTI Updated on: March 18, 2012 16:59 IST
generally retrospective amendments should be avoided says
generally retrospective amendments should be avoided says montek

New Delhi, Mar 18: Plan panel Deputy Chairman Montek Singh Ahluwalia today said that generally changes to the laws should not be implemented retrospectively even as he termed the proposed amendment to the I-T Act to tax Vodafone-like deals as “appropriate”.


“I think, objectively, the change is not only appropriate one....it is something we have singled in the Direct Taxes Code (DTC). Going by general rules. But I agree with you that one should avoid retrospective amendments,” Ahluwalia told Karan Thapar in ‘Devil's Advocate' programme on CNN-IBN when asked why should this amendment be effected retrospectively.

As per amendments proposed in the I-T Act by Finance Minister Pranab Mukherjee in his Budget proposals, all persons, whether residents or non-residents, having business connection in India, will have to deduct tax at source and pay it to the government even if the transaction is executed on a foreign soil.

The amendments, once carried out, will have implications on Vodafone which won the Rs 11,000-crore tax dispute case against tax authorities in the Supreme Court. It will also impact other similar cases involving taxes to the tune of about Rs 30,000 crore.

About the impact of the proposed amendment on Vodafone case, Ahluwalia said, “I do not want to comment on the impact on any particular company. I think... it is not only appropriate one, but something we have singled in the proposed DTC. We are going to do that anyway.”

On the impact of this move on foreign investment flows, he said, “Whenever you have retrospective amendment which affects an individual, he will certainly feel that he has been treated unfairly.”

However, he allayed fears that this will impact the flow of foreign funds into the country. “I think that foreign investors should have absolutely no doubt in their mind that the government does not intend to change some of the basic conditions retrospectively.

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