New Delhi, August 9th: The draft law on tax laws (Amendment) 2021 was passed by the Rajya Sabha today, August 9th past the Lok Sabha on August 6, 2021. The law thus abolished the controversial after-tax after more than nine years since its introduction. This means that the bill aims to end all retrospective taxation imposed on indirect transfers of Indian assets. The bill states that “based on the aforementioned retrospective amendment, there will be no future tax claims for an indirect transfer of Indian assets if the transaction was carried out before May 28, 2012.”
The Taxation Laws (Amendment) Bill 2021 was introduced after India lost retroactive tax claim proceedings against Cairn Energy Plc. and Vodafone. The center had challenged the judgment in both cases. According to reports, the bill aims to amend the Income Tax Act to effectively withdraw India’s tax claims on 17 companies, including Vodafone and Cairn Energy, on capital gains from transactions before May 28, 2012. Tax Bill 2021 Bill: Government Buries Retro Tax and Introduces New Bill in Lok Sabha to Withdraw Claims Against Cairn Energy Plc, Vodafone.
Tax Law Bill (Amendment), 2021
The bill will amend the Income-Tax Act 1961 so that, based on the aforementioned retrospective change, 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 when on which the 2012 financial draft received the approval of the President).
Striking features of the draft law on tax laws (Amendment 2021)
- The Taxation Laws (Amendment) Bill, 2021, provides that, based on the retrospective change made by the Finance Act, 2012, indirect transfers of Indian assets if the transaction was made before May 28, 2012, will not be subject to future tax claims.
- It is envisaged that the Indirect Transfer Request for Indian Assets submitted prior to May 28, 2012, will be canceled if certain conditions are met and an obligation is made
- In these cases, suggests reimbursing the amount paid without interest.
- Proposes to amend the Finance Act 2012 to provide that the validation of the claim under Section 119 of the Finance Act 2012 is not required if certain conditions are met and an obligation is made.
- Empowers CBDT to make rules to indicate the form and manner in which a commitment should be submitted.
Here is the tweet from the Indian Income Tax Service:
Proposes to amend the Finance Act 2012 to provide that the validation of the claim under Section 119 of the Finance Act 2012 is not required if certain conditions are met and an obligation is made. #ParlamentMonsoonSession
(2/3) pic.twitter.com/pdFTfSlfxp
– Income Tax India (@IncomeTaxIndia) August 9, 2021
With The Taxation Laws (Amendment) Bill, 2021 passed in both houses of parliament, all tax claims on companies like Cairn Energy and Vodafone, which passed a 2012 law on indirect transfers of Indian assets before 28th, will be withdrawn.
As a reminder, India hit Vodafone in January 2013 with a tax claim of Rs 14,200 billion using this retrospective tax law, including the main tax of Rs 7,990 billion and interest. This was updated to Rs 22,100 crore plus interest in February 2016. According to reports, the country also raised Cairn Energy in January 2014 with an estimate of $ 10.247 billion.
Proposed during the Rajya Sabha on Monday the 9th bill.
(The above story first appeared on LatestLY on August 09, 2021, 6:50 pm IST. For more news and updates on politics, world, sport, entertainment and lifestyle, log on to our website Latestly.com).