Mumbai: The overall impact of the proposed amendment of the Income Tax Act in the Finance Bill will be very negative and dampen investor sentiments, senior lawyer of Supreme Court, Harish Salve said here on Saturday.

"This will have huge deterrent effect on foreign investors. It will push up their cost of investment in the country, which has negative impact on flows," Salve told reporters on the sidelines of an event organised by Indian Merchants' Chamber here.

He also said that the proposed law would empower Income Tax department, whose views will only prevail during a dispute.

"Investment depends upon sentiment... No one is taking a holistic view what will happen in corresponding transactions.

"When Indians are selling offshore assets that will not be taxed, but foreigners selling assets in India will be taxed. No other country in the world has such a law," Salve said.

Currently, the Parliament is considering the proposed amendment in Income Tax Act, which seeks to tax off-shore transactions retrospectively with a underlying Indian asset.

Salve, who had represented Vodafone in its tax case in the Supreme Court, also said that GAAR (General Anti Avoidance Rules) would negatively impact capital inflows into the country.

He also pointed out that GDP growth would be impacted due to proposed amendments in the Finance Bill.

"GDP growth rate will slow down if these provisions come in to force, which will adversely affect job creation,' Salve said.