New Delhi, August 9th: The Tax Act (Amendment) Bill 2021 was adopted by the Rajya Sabha today, i. H. adopted on 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 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. The bill is reported to amend the Income Tax Act to 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 amendment, 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).
Noticeable features of the draft law on tax laws (Amendment) 2021
- The Taxation Laws (Amendment) Bill 2021 provides that, due to the retrospective amendment to the Finance Act 2012, no tax claims will be made for any indirect transfer of Indian assets if the transaction was made before May 28, 2012.
- It is envisaged that the Indirect Transfer Request for Indian Assets submitted prior to May 28, 2012, will be canceled upon fulfillment of certain conditions and upon submission of an undertaking
- 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 specify 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 are on companies like Cairn Energy and Vodafone that used a 2012 Indirect Transfer of Indian Assets Act prior to May 28, 2012 will be withdrawn.
As a reminder, India had struck Vodafone in January 2013 using this retroactive tax law with a tax claim of Rs 14,200 million including the main tax of Rs 7,990 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.
During the Rajya Sabha proposed on Monday the 9th bill.
(The above story first appeared on LatestLY on August 09, 2021, 6:50 p.m. IST. For more news and updates on politics, world, sport, entertainment and lifestyle, please visit our website Latestly.com).