Amendment to I-T Act will not impact FDI: Basu

**New Delhi:**Chief Economic Advisor KaushikBasu today said amending the Income Tax Act with retrospectiveeffect will not impact foreign investments into India.

“I don’t think there is going to be any negative effecton investor sentiment at all,” Basu said while replying to aquery on whether I-T Act amendment would harm foreign directinvestments.

The finance ministry had proposed in the Budget tointroduce a retrospective provision for tax on some types ofinternational mergers.

“This is being seen as a one-off thing… There werecertain aberrations, certain misunderstandings on the law thatwe have adjusted,” Basu said.

Various corporate bodies from US and UK had cautionedthat such tax proposals could dent India’s image as aninvestment hotspot.

The issue pertains to a Budget proposal to amend theIncome Tax Act 1961, with retrospective effect to bring intotax net overseas mergers and acquisitions involving assets inIndia. Such amendment will bring Vodafone type deals under thetax net.

FDI flows into India have continued unabated with ahighest ever monthly inflow in March at $ 8.1 billion.Cumulative FDI inflows for the fiscal 2011-12 amounted to $36.50 billion.

PTI