Blind Spot

The debate over Vodafone paying the Indian tax authorities Rs 11,200 crore ($ 2.1 billion) as withholding tax has been on for nearly five years. While the Supreme Court gave a clean chit to Vodafone, what is imperative is that businesses need to pay taxes, be it in India or elsewhere.

However, the government of India needs to be more proactive than reactive in legislating laws for businesses. It amended the Income Tax Act with retrospective effect from 1 April 1962, only after the Supreme Court verdict went in favour of Vodafone. It took the Union government 22 years after liberalisation to amend the law.

Logically, with rising cross-border trade, logically an unambiguous law should have been in place long before the Vodafone deal happened.

Even though amending laws retrospectively is not unusual across the world, it does cause uncertainty that is best avoided.

Unpredictability, after all, is not to be expected in sovereign legislation.

STRICTLY BUSINESS

Yahoo has said it will cut 2,000 jobs, 14 per cent of its workforce. Yahoo expects to save about $375 million through its cost-cutting programme. This is the company's sixth round of job cuts in the past four years.

(This story was published in Businessworld Issue Dated 16-04-2012)