New Delhi, August 5 (SocialNews.XYZ) The government has initiated a new round of tax law amendments that will override retrospective tax amendment provisions introduced in 2012 that provided for taxing all gains on the indirect transfer of Indian assets made by foreign entities.
The bill proposes to amend the Income Tax Act 1961 to provide that no tax claim will be made in the future on the basis of the said retrospective amendment for any indirect transfer of Indian assets. if the transaction was undertaken before May 28, 2012 – when the budget bill was voted by Parliament in 2012.
The bill also proposes to provide that the request raised for the indirect transfer of Indian assets, made before May 28, 2012, will be canceled when specified conditions are met, such as the withdrawal or the surrender of a withdrawal commitment. of an ongoing dispute and the delivery of a commitment to the effect that no claim for costs, damages, interest and others will be filed.
In addition, according to the invoice, the amount paid in these cases would be refunded without any interest on it.
This bill would give Britain’s Cairn Energy and Vodafone Plc a window to end arbitrations and settle their long-standing tax disputes with the government.
An arbitral tribunal in The Hague rendered its award on December 21, 2020 in favor of Cairn Energy Plc and Cairn UK Holdings Ltd (CUHL), forcing the Indian government to pay it an arbitration award of $ 1.2 billion.
Recently, the government confirmed in parliament that a French court ordered the freezing of certain Indian government assets in the Cairn arbitration award case.
Additionally, in the Vodafone arbitration case, The Hague Permanent Court of Arbitration ruled in favor of the company last year.
The court ruled that the conduct of the Indian tax department violated “fair and equitable” treatment, thus rendering Vodafone exempt from paying a retrospective tax claim of over Rs 20,000 crore raised by the Indian authorities.
Tax expert and former president of the Institute of Chartered Accountants of India, Ved Jain believed the development would be a great relief for Vodafone and Cairn.
“The Tax Law (Amendment) Bill 2021, presented by FM today to the Lok Sabha, concerns the withdrawal of the retrospective amendment made in 2012 concerning the taxation of capital gains resulting from the indirect transfer of ‘assets located in India. This will settle the matter of arbitration in accordance with the Income Tax Act of India itself, no tax will be payable on such capital gains until May 28, 2012 when this amendment comes into force. “, did he declare.