Explained: Chronology Of India's Huge U-Turn On Retrospective Tax

The Indian government has suffered a string of setbacks in international arbitration over its retrospective tax claims in recent months.

The Indian government on Thursday proposed to refund companies in disputes over retrospective tax, including telecoms operator Vodofone and energy giant Cairn, after a string of setbacks in international litigation. The tax raised for the indirect transfer of Indian assets before May 2012 would be "nullified on fulfilment of specified conditions" such as the withdrawal of pending litigation and an undertaking that no damages claims would be filed, a government statement said. The dispute began in 2012 after the then Congress-led coalition government decided to impose capital gains tax retrospectively on some companies, such as Vodafone and Cairn, which took their cases to arbitration and won. The cases were met with a huge outcry among foreign investors and also dealt a blow to the government of former Prime Minister Manmohan Singh, who lost power in a 2014 election to Prime Minister Narendra Modi.