India proposed amending a law that will enable it to tax capital gains involving foreign companies with assets in the nation after the Supreme Court ruled that Vodafone Group Plc (VOD) doesn’t have to pay $2.2 billion in taxes. The change will be retrospective from April 1, 1962, according to budget documents presented by Finance Minister Pranab Mukherjee in Parliament today. Vodafone shares rose 0.4 percent to 166.5 pence at 10:22 a.m. in London. The government can’t seek capital gains tax from Vodafone’s purchase of Hutchison’s wireless assets because the transaction occurred between foreign companies, according to the ruling by a Supreme Court panel headed by Chief Justice S.H. Kapadia in January. The court also directed the government to return a 25 billion-rupee ($496 million) deposit Newbury, England-based Vodafone made on the contested tax bill, plus 4 percent interest. Today’s announcement “is going to create lot of litigation in transactions that have taken place outside India, which were of the nature of Vodafone,” said Daksha Baxi, executive director at law firm Khaitan & Co. “It’s a very peculiar situation.” The amendment will affect 400 billion rupees ($7.9 billion) of tax payable to the government, Finance Secretary R.S. Gujral said in New Delhi Today.