A Bill that aims to end all retrospective taxes imposed on indirect transfer of Indian assets was returned by Rajya Sabha on Monday amidst a walkout by the Congress, TMC and DMK.
Now After the 'The Taxation Laws (Amendment) Bill, 2021' is returned by Rajya Sabha too, all tax demands made on companies like Cairn Energy and Vodafone using a 2012 legislation on indirect transfer of Indian assets prior to May 28, 2012, will be withdrawn.
Lok Sabha had passed the Bill last week.
Earlier, the Congress, TMC and DMK walked out of the House before the Bill was taken up for a discussion.
Replying on the debate, Finance Minister Nirmala Sitharaman said, “This (Bill ) is appealing enough and putting an end to this ghost which we have been carrying all these while from 2012.”
"I seek support of the House to make India look very clear, transparent and fair taxation land. Therefore, this whole thing about retrospective amendment Bill, which was brought in, since then we were bearing the negativity of this all over the world.”
The minister also told the House the Bill provides for no payment of interest on refunds made under this and the parties seeking relief would not pursue further appeals or litigation in these cases.
Besides creating uncertainly in the minds of investors, the retrospective taxes have in recent months been overturned by international arbitration tribunals in two high profile cases -- UK telecom giant Vodafone Group and oil producer Cairn Energy.
Rules will be framed under the law giving a reasonable timeframe for the companies to come and give an undertaking to the government that they will not pursue the cases.
They will also have to give an undertaking that they agree to forego the interest on amounts collected.
The Bill proposes to amend the Income-tax Act, 1961 so as to provide that no tax demand shall be raised in 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 (i.e., the date on which the Finance Bill, 2012 received the assent of the President).
It further proposed that the tax on indirect transfer of Indian assets made before May 28, 2012, shall be nullified on furnishing of undertaking for withdrawal of pending litigation.