Authorities Amends Revenue Tax Act; Retro tax claims canceled

The government introduced a bill to the Lok Sabha on Thursday to amend the income tax law and thereby abolish the controversial tax claims. The indirect tax transfer of Indian assets that was made prior to May 28, 2012 is now no post-tax.

The bill stipulates that litigants must withdraw their proceedings and undertake not to assert any claims for costs, damages, interest, etc.

In addition, the state will reimburse the parties interest-free if they meet claims.

The bill’s explanatory memorandum states: “The country is now at a point where rapid economic recovery is the order of the day after the COVID-19 pandemic … Foreign investment plays an important role in promoting faster economic growth and employment … Subsequent clarification corrections and the resulting demand in some cases are still a sore point with potential investors. “

It is noteworthy that an international arbitration tribunal in The Hague ruled last year that India’s imposition of tax debts on Vodafone, as well as interest and penalties, violated an investment treaty between India and the Netherlands

Vodafone’s attorney, Anuradha Dutt, responded to the news, telling CNBC-TV18, “I’m really glad the government decided to do this. I think it is also a strong signal that the government is ready to review some of the mistakes that may have been made earlier and is looking and listening to foreign investors and wants foreign investors to join. So they will respect the rules of the law. I think it’s a very, very important and good thing that came about. “

How will that affect the treasury? In response to the news, tax expert Dinesh Kanabar told CNBC-TV18 that Vodafone Idea did not pay the tax authority any money for retrospective tax claims and therefore no refund is required. However, India may have to reimburse the money raised by Cairn India.

According to the bill, in the event of a recovery, the amount will be refunded, but without interest, and the government will not pay any damages, etc.

“Of course this is for the Cairn matter, where the arbitral award is about costs and damages and the government clearly is not and should not be asking for damages. We have taken a significant step forward so far, a very, very welcome step I say would, ”says Kanabar.

The total recoveries under the Retro Tax Act so far are Rs 8,100 cr from four companies. Most of that is around 7,900 billion rupees from Cairn UK and the rest comes from the other three.

According to sources from the Treasury The government is examining the effects of the repayment of 7,900 billion Cairn Energy is attempting to seize the Indian government’s assets overseas in order to seek back $ 1.2 billion in compensation.

Treasury Department sources tell @TimsyJaipuria that the government is considering the impact of repaying Cr 7,600 to #Cairn Energy as the company attempts to seize the Indian government’s assets overseas for a $ 1.2 billion compensation award get back

First published: August 5th, 2021, 5:51 p.m.