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Govt to amend Income Tax Act to nullify retrospective tax demands
After Vodafone and Cairn Energy setbacks, Union government on Thursday moved to end retrospective tax by amending Income Tax Act.
Finance Minister Nirmala Sitharaman introduced The Taxation Laws (Amendment) Bill, 2021 in the Lok Sabha, which seeks to withdraw tax demands made on indirect transfer of Indian assets prior to May 28, 2012.
Government also proposed to refund the amount paid in these cases without any interest thereon. Tax raised for the indirect transfer of Indian assets before May 2012 would be “nullified on fulfillment of specified conditions” such as the withdrawal of pending litigation and an undertaking that no damages claims would be filed, a government statement said.
This Bill impacts retro tax cases of at least two big companies — Cairn Energy Plc and Vodafone Group of UK. Both firms had won international arbitrations against levy of retrospective taxes on them.
“Bill proposes to amend IT Act, so as to provide that no tax demand shall be raised in future on basis of said retrospective amendment for any indirect transfer of Indian assets if transaction before 28th May, 2012,” said government.
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