A Bill to end all retrospective taxation imposed on indirect transfer of Indian assets was passed by the Lok Sabha on Friday. The government’s move to scrap the tax law. The finance minister, Sitharaman pointed out that the 2012 Finance Act provision that amended the Income Tax Act to make offshore transactions involving Indian assets–including those executed prior to the change in law, taxable in India-“a matter of prolonged litigation.”
The retrospective tax law imposed a tax on companies’ capital gains, causing a fallout with British firms like Cairn Energy Plc and Vodafone group. The bill was announced by the late Pranab Mukherjee during his tenure as the finance minister. Now, the current government is planning to reverse this and do away with cases pending regarding the law in Indian courts. Many investors have already backed it as it supports the pleas of foreign investors.
There have been 17 litigations as a result of retrospective tax legislation and even the Supreme Courtroom had stated in 2012 that the tax couldn’t be levied for an oblique switch of shares of international corporations.
The Finance Minister while explaining the bill, said 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 and furnishing of an undertaking to the effect that no claim for cost, damages, interest, etc., shall be filed.
Image Curtsey: Outlook
