What Is The Taxation Laws Amendment Bill 2021; Will It End Retrospective Tax Law?

 - Sakshi Post

After India lost retrospective tax demand lawsuits against Cairn Energy Plc. and Vodafone, the Taxation Laws (Amendment) Bill 2021 was introduced.

The Taxation Laws (Amendment) Bill 2021 proposes that companies facing trials in retrospective tax demand cases be refunded the amount paid without interest.

Taxation Laws Amendment Bill 2021: The Taxation Laws (Amendment) Bill, 2021, was approved by the Lok Sabha on Friday, scrapping retrospective tax demand provisions. The bill allows the government to waive tax demands on indirect Indian asset transfers initiated before May 28, 2012, if the transaction was completed before that date. It also suggested that firms facing prosecution in similar situations should be refunded the money they paid without interest.

This bill proposes changes to the Income Tax Act of 1961, including the elimination of the divisive practice of retrospective taxation.

"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 May 28, 2012." according to the bill. This is the same day on which the President of India gave his assent to the Finance Bill in 2012.

"Keeping up with the commitment of the BJP that we don't believe in the retrospective application of tax, we are fulfilling that word by bringing this amendment," Finance Minister Nirmala Sitharaman stated in the Lok Sabha on the Taxation Laws (Amendment) Bill 2021.

After losing retrospective tax demand lawsuits against Cairn Energy Plc. and Vodafone, India proposed the Taxation Laws (Amendment) Bill 2021. In each of these cases, the Centre had appealed the verdicts, but the ongoing existence of retrospective taxes had generated many issues in the country. The bill's passage is likely to have a significant influence on these cases.

The bill also states that any demand raised for "indirect transfer of Indian assets made before May 28, 2012, shall be nullified on fulfilment of specific conditions such as withdrawal or furnishing of an undertaking for withdrawal of pending litigation and furnishing of an undertaking to the effect that no claim for cost, damages, interest, etc. shall be filed."

The Taxation Laws (Amendment) Bill 2021 proposes that companies facing trials in retrospective tax demand cases be refunded the amount paid without interest. T V Somanathan, the Finance Secretary, had previously stated that the retrospective tax law had resulted in a total collection of Rs 8,100 crore. Cairn Energy alone contributed Rs 7,900 crore. This money is going to be reimbursed.

According to the law, the demand was raised in 17 cases, and the retro tax was criticised for violating the concept of tax certainty and tarnishing India's image as a desirable location. It was a thorn in the side of prospective investors.

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