What spurred India's reversal of retro tax

The Lok Sabha has passed the Taxation Laws (Amendment) Bill, which proposes to scrap the retrospective application of the 2012 amendment to the income tax law for indirect transfer of Indian assets. The Finance Ministry will soon finalize rules under the law to facilitate refund of principal tax collected and settlement of the cases, said an official.
The adverse verdict in the international arbitration case on retrospective tax filed by Vodafone Group last year got policymakers thinking that India needed to bite the bullet and bury the controversial provision to send out a strong signal to global investors, said people aware of the matter.