The Center unveiled the Tax Law (Amendment) Bill on Thursday to finalize the retroactive income tax law introduced in 2012. Once the changes are passed, there won’t be an incident like that of Cairn Energy or Vodafone.
“The bill proposes to amend the Income Tax Act of 1961 so that, based on the aforementioned retrospective amendment, no future tax claims will be made on indirect transfers of Indian assets if the transaction was made before May 28, 2012 (i.e. the date on which received the President’s approval of the 2012 Finance Act), “the Treasury Department said in a statement.
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“It is also proposed to provide that before the 28th that no claim for costs, damages, interest, etc. should be asserted. It is also proposed that the amount paid be reimbursed interest-free in these cases, “the ministry said.
What is a retroactive tax?
This is a tax levied on past transactions. The UPA government retroactively imposed capital gains tax on some companies such as Cairn and Vodafone in 2012.
The move comes when India lost both cases before the international tribunal in the Netherlands, filed by both Cairn and Vodafone. In both cases, the court ruled that India should no longer attempt to recover the “alleged tax liability or any interest and / or penalties”.
Vodafone and Cairn cases
Cairn Energy, the British oil and gas company, is trying to reclaim $ 1.2 billion from India, while the government is not responsible in the Vodafone case.
The country is now at a point where rapid economic recovery from the Covid-19 pandemic is the order of the day and foreign investment plays an important role in promoting faster economic growth and employment, the ministry said.