NEW DELHI: Multinational corporations like Cairn and Vodafone had reason to cheer when the center tabled a bill on Thursday waiving its power to collect retrospective income tax.
The bill was introduced by Union Finance Minister Nirmala Sitharaman in the Lok Sabha. According to the provisions of the bill, no retrospective tax claims will be made if the transaction was completed prior to May 28, 2012. The move will take a lot of pressure off companies like Cairn Energy and Vodafone and will likely end their longstanding operations. ongoing litigation with the center over tax issues.
“The bill proposes to amend the 1961 Income Tax Act to ensure this
Based on the aforementioned retrospective change, no tax claim will be made in the future for an indirect transfer of Indian assets if the transaction was carried out before May 28, 2012, ”said Sitharaman in a written statement accompanying the bill.
“It is also proposed to provide that the amount paid before the 28th. It is also proposed that the amount paid in these cases be reimbursed without interest,” said the Finance Minister.
A senior Treasury official said that companies wishing to withdraw the litigation must pledge to the government not to seek legal damage or reimbursement, and the center will take responsibility for paying the full amount of the principal. repay the affected company (s).
This retroactive tax law was introduced in 2012 by the then finance minister, Pranab Mukherjee. The aim was to tax the capital gains of foreign companies such as Cairn Energy Plc and the UK’s Vodafone Group retrospectively for the indirect transfer of Indian assets.