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Disputed Retro Tax Nullified by Government, New Tax Laws Introduced

New tax laws put into function…get the details

Friday, 6th August 2021

The Government of India on Thursday has made a big move that in all likelihood will invalidate the retrospective tax as it said it will come up with a Bill that will make specific amendments in the Income Tax Act.

The Taxation Laws (Amendment) was introduced in the Lok Sabha by Finance Minister Nirmala Sitharaman.

Sitharaman said in a statement, “The Bill proposes to amend the Income-tax Act, 1961 so as to provide that no tax demand shall be raised in future on the basis of the said retrospective amendment for any indirect transfer of Indian assets if the transaction was undertaken before 28th May, 2012 (i.e., the date on which the Finance Bill, 2012 received the assent of the President).”

The government had previously made amends in the tax laws retrospectively in 2012. This had sparked huge controversy and international companies that had acquired assets on Indian companies, were asked to shell out massive amounts. With the new changes, the Centre said companies like Cairn Energy will get refunds.

Cairn, which runs oil and gas operations in India, has been awarded damages of more than $1.2 billion, plus interest and costs, in December by the Permanent Court of Arbitration at The Hague. One of the lawyers representing their firm, Uday Walia said, “Retrospective tax has been a weight on the shoulders of India", this new move is a very positive signal for foreign investors.”

The decision will also give other companies like Vodafone an opportunity at receiving huge refunds without costs or interests. The firm owes ? 22,000 crore to the government as payment for license and spectrum fees. 

Revenue Secretary Tarun Bajaj said, “unfair criticism to say that we have done this under pressure because of Air India assets being claimed... this would have been a long battle, but we decided for the best interests (of all) and investors.”

The News Talkie Bureau



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