PM ‘healing touch’: Govt to look afresh at Vodafone tax

The income-tax department will likely not serve a demand notice to the UK-based telecom major — a move aimed at a much-needed image makeover for the government, the official said. The PM, said another top official, is keen to provide a "healing touch to the economy", which will now be the ministry's focus.

The broad message from the PM's meeting with all secretaries of the ministry was that the government intends to put the Vodafone dispute on the back burner and focus on macro-economic issues to improve India's image as an investor-friendly destination, the official said.

No overt retraction would, however, happen, because any official announcement conveying a dilution of the government's stance could potentially embarrass former finance minister Pranab Mukherjee before the presidential election, it was felt.

I-T officials said the government was also likely to wait and watch out for a verdict on the Mcleod Russel (India) Ltd case, where the Kolkata-based firm — the world's largest tea plantation company — moved the high court last month challenging the "constitutional validity" of the retrospective amendments announced in Budget 2012-13.

The officials said it would be helpful to have a degree of clarity on the legal challenge by Mcleod Russel to the amendments moved in the finance Bill.

"Sending a demand notice (to Vodafone) will be premature because there are many defences for Vodafone right now. They have won in the Supreme Court... retrospective amendment has been challenged in the Calcutta High Court... The issue of sending notice is in abeyance for now," an official said.

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