Parliament on Monday passed a bill seeking to repeal a controversial tax provision retroactively that would affect Cairn Energy and Vodafone’s retroactive tax issues.
Before submitting the Tax Bills (Amendment Act) 2021 in the Rajya Sabha for consideration by Finance Minister Nirmala Sitharanan on Monday, members of Congress, Trinamool Congress and DMK went on strike and said the government had included the bill in the supplementary agenda without them. The correct message.
Lok Sabha had passed the bill earlier.
The bill proposes to amend the Income Tax Act 1961 to provide that no future tax claim based on retrospective adjustment of any indirect transfer of Indian assets shall be made if the transaction was made before May 28, 2012.
The Finance Bill 2012 received the approval of the President of the Republic on this day.
The new bill suggests that a request for indirect transfer of Indian assets made before May 28, 2012 should be withdrawn when there are specific conditions, such as withdrawal or deposit of lien, withdrawal of pending litigation and filing of lien which is a claim for costs, damages and interest may not.
British oil and gas company Cairn Energy is seeking to recover $1.2 billion from India after winning an anti-tax arbitration. The order was appealed by the Indian government to the Hague Court of Appeal on March 22, 2021.
The Finance Act 2012 provided for the validation of the request under the Income Tax Act 1961 for matters relating to the indirect transfer of Indian assets.
Below, income tax returns are filed in seventeen cases.
In two cases, the appraisals were on hold because payments were suspended by the Supreme Court. In four cases, an appeal was lodged to arbitration under the Bilateral Investment Protection Treaty with the United Kingdom and the Netherlands. In two cases the arbitral tribunal ruled in favor of the taxpayer and against the tax authorities.
The statement of objectives and motivations for the new bill states that the interpretative amendments introduced by the 2012 Finance Act have mainly drawn criticism from stakeholders regarding the retroactive effect of the amendments.
Such retrospective adjustments would contravene the principle of tax certainty and damage India’s reputation as an attractive destination. In recent years, significant reforms have been carried out in the financial sector and infrastructure that have created a positive investment climate in the country.”
“However, this retrospective illustrative adjustment and the subsequent demand that has arisen in a few cases remains a weakness for potential investors,” he adds.
Today, the country stands at a crossroads where rapid economic recovery from the COVID-19 pandemic is the need of the hour, and foreign investment plays an important role in promoting rapid economic growth and job creation, the statement said.
Congress party leader, Adir Ranjan Chaudhry, accused the government of hastily passing bills amid opposition protests.
“We didn’t ask for much, our only request is that there be a discussion about the storming of Pegasus. Or that the request is true, but this administration is trying to describe it as invalid.”
(Except for the headline, this story has not been edited by the NDTV crew and is published from a syndicated feed.)
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