New Delhi / UNI: The government has presented a draft regulation to implement the latest amendment to the Income Tax Act to abolish retrospective tax provisions.
The draft regulation, which defines the conditions to be met and the procedure for implementing the change, was made publicly available for comments and suggestions by September 4, 2021.
“To implement the change made by the 2021 Act, draft regulations were prepared to amend the 1962 Income Tax Rules that set out the conditions to be met and the procedure for implementing the change made by the 2021 Act,” an official statement from the Central Board said of Direct Taxes (CBDT).
Parliament passed the Tax Law Amendment Act 2021 during the Monsoon session, which sought to repeal the controversial retroactive tax provision introduced in 2012 during the UPA government.
The move aims to end tax disputes with Vodafone, Cairn Energy and over a dozen other companies and to facilitate new foreign investment.
After the amendment to the Income Tax Act in 2012 with retrospective application of the regulation, the income tax claim was levied in 17 cases. In two cases, judgments are pending on a suspension granted by the High Court.
Of the 17 cases, four were used to arbitrate under the bilateral investment protection agreements with the United Kingdom and the Netherlands. In two cases the arbitral tribunal ruled in favor of the taxpayer and against the income tax office.
The Tax Act (Amending Act) 2021 (Act 2021) has now amended the Income Tax Act 1961 (Income Tax Act) to the effect that due to the amendment to Section 9 of the Income Tax Act, the Finance Act of 2012 established for any indirect offshore transfer of Indian assets if the transaction was prior on May 28, 2012.
Accordingly, a request made prior to May 28, 2012 for indirect transfers of Indian assets to companies that meet certain conditions, such as: , be submitted.