“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,” Finance Minister Nirmala Sitharaman said in a written statement along with the bill.
Finance Ministry (Image: PTI)
The government, on August 5, tabled the Taxation Laws Amendment Bill in Lok Sabha, which seeks to withdraw the contentious retrospective tax nearly a decade after its introduction.
The move will come as a relief to companies like Cairn Energy and Vodafone, and is likely to end their long-standing legal dispute with the centre.
“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,” Finance Minister Nirmala Sitharaman said in a written statement along with the bill.
28th May 2012 was the date when the 2012 Finance Act, which gave legal backing to retrospective taxation, was assented to by then President Pratibha Patil.
“It is further proposed to provide that the demand raised for indirect transfer of Indian assets made before 28th May, 2012 shall be nullified on fulfilment of specified conditions such as withdrawal or furnishing of undertaking for withdrawal of pending litigation,” Sitharaman said.
This move by the centre paves way for companies, including Vodafone and Cairn, to withdraw the litigation in Indian and international courts, with the assurance from the government that its demand for retrospective tax will also be withdrawn.
“It is also proposed to refund the amount paid in these cases without any interest thereon,” Sitharaman said.
A top official told Moneycontrol that companies which withdraw litigation will also have to give an undertaking that they will not seek legal damages or costs, and the centre will repay the principle amount in full.
(This is a developing story, more to follow)
