Taxation Laws Amendment Bill 2021
Recently, a Bill has been introduced in the Parliament to repeal the retrospective tax law by the Central Government.
- The Taxation Laws (Amendment) Bill 2021 proposes to amend the retrospective taxation measures introduced by the Finance Act, 2012.
- The main objective of the amendment in the year 2012 was to levy tax on companies incorporated abroad, which carried on business in India but did not pay capital gains tax despite change in ownership. This Act was implemented with retrospective effect.
- However, due to this, the government has faced defeat in the Court of Arbitration against Cairn Energy and Vodafone Group.
Features of the Taxation Laws (Amendment) Bill 2021
- Any indirect transfer of Indian assets in case relating to any transaction prior to 28th May, 2012 shall not attract any tax in future on the basis of the said retrospective amendment.
- The demand for indirect transfer of Indian assets made before 28th May, 2012 will be rejected after compliance of the specified conditions.
- The Bill also proposes to refund the amount paid in these cases without any interest thereon.
- However, offshore transactions involving Indian assets executed after May 28, 2012 are still taxable, as there is no provision for retrospective application of the law.
- Retrospective taxation allows a country to make rules to levy taxes and duties on certain products, goods or services, deals and companies before the date of passing of the law.
Source – The Hindu
