Prime Minister Narendra Modi, while speaking at the annual summit of industry body Confederation of Indian Industries (CII), on Wednesday said that government’s move to end retrospective tax signified the undoing of a mistake in made in the past.
PM Modi said that the reforms undertaken by the centre over the years show that the the government has carried out reforms not out of compulsion but because of conviction.
“Even in the current Parliament session, we have carried out many reforms, like the Factoring Regulation Amendment Bill and the Deposit Insurance and Credit Guarantee Bill. Our decision to repeal retrospective tax will strengthen the trust factor between the government and the industry,” Modi said.
The government last week ended taxes raised for the indirect transfer of Indian assets before May 2012 if companies withdrew pending litigation and gave an undertaking that no damages claims would be filed.
Both Houses of Parliament have cleared the Taxation Laws Amendment Bill, which seeks to end the nine-year-old retrospective tax.
The Bill proposes to amend the Income Tax Act, 1961 so as to provide that no tax demand shall be raised 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.
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 fulfillment 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, interest, etc., shall be filed.”