If the government is serious about wooing foreign investment, it should comply with the Vodafone ruling
The Vodafone Group has just won one of the most high-stakes legal battles involving a foreign investor and the Indian state under international law. An Investor-State Dispute Settlement (ISDS) tribunal, constituted under the India-Netherlands bilateral investment treaty (BIT), has ruled that India’s imposition of tax liability amounting to ₹22,000 crore on Vodafone is in breach of India’s BIT obligations.
Shaking the faith of foreign investors
This case arose after the Indian Parliament in 2012 amended the Income Tax Act declaring that income deemed to be accruing to non-residents, directly or indirectly, through the transfer of a capital asset situated in India is taxable retrospectively with effect from April 1, 1962. Obnoxiously, this amendment was carried out to…