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Govt introduces bill in LS to scrap retrospective tax law, tax demand against Vodafone, Cairn to be withdrawn

The Narendra Modi Government on Thursday introduced a bill in the Lok Sabha seeking to scrap retrospective tax demands it had made on companies such as Cairn Energy Plc and Vodafone Group of UK.

Finance Minister Nirmala Sitharaman introduced The Taxation Laws (Amendment) Bill, 2021 in the Lok Sabha which seeks to withdraw tax demands made on indirect transfer of Indian assets prior to May 28, 2012.

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.

The Bill further proposed to provide that “the demand raised for indirect transfer of Indian assets made before May 28, 2012 shall be nullified on fulfilment of specified conditions such as withdrawal or furnishing of undertaking for withdrawal of pending litigation and furnishing of an undertaking to the effect that no claim for cost, damages, interst, etc., shall be filed.”

Earlier, India had lost the retrospective tax demand case against Vodafone and in December last year, filed an appeal. In September, an international arbitration tribunal in The Hague had ruled that India’s imposition of tax liability on Vodafone, as well as interest and penalties, breached an investment treaty agreement between India and the Netherlands.

The Narendra Modi Government on Thursday introduced a bill in the Lok Sabha seeking to scrap retrospective tax demands it had made on companies such as Cairn Energy Plc and Vodafone Group of UK.

Finance Minister Nirmala Sitharaman introduced The Taxation Laws (Amendment) Bill, 2021 in the Lok Sabha which seeks to withdraw tax demands made on indirect transfer of Indian assets prior to May 28, 2012.

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.

The Bill further proposed to provide that “the demand raised for indirect transfer of Indian assets made before May 28, 2012 shall be nullified on fulfilment of specified conditions such as withdrawal or furnishing of undertaking for withdrawal of pending litigation and furnishing of an undertaking to the effect that no claim for cost, damages, interst, etc., shall be filed.”

Earlier, India had lost the retrospective tax demand case against Vodafone and in December last year, filed an appeal. In September, an international arbitration tribunal in The Hague had ruled that India’s imposition of tax liability on Vodafone, as well as interest and penalties, breached an investment treaty agreement between India and the Netherlands.

 

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