The Income Tax Department had issued notices to Vodafone imposing penalty of thousands of crores of rupees since they did not abide by the rules in case of merger and acquisition. Not only Vodafone, but other MNCs were putting strong opposition to the correct move of the IT Department. When Finance Minister Pranab Mukherjee was on tour in US, he had told the business community who met him that ‘how can tax be recovered for many years retrospectively?’. It was a clear indication that the government will succumb to the pressures of the MNCs.

Now that is exactly  what is happening.  The central government is reported to have brought an amendment to the Income Tax Act to this effect which will be part of the Finance Bill -2012. When the Amendment to the Act is passed, Vodafone will be free from paying the taxes.

This is one more case of the government surrendering to the dictates and pressures of the MNCs. This is, of course, part of the neo-liberal policy of the government.