Lok Sabha passes Bill to nullify retro taxes
Cairn, Vodafone to benefit
– The Bill will impact retrospective tax cases of at least two big companies — Cairn Energy and Vodafone Group
– Both firms had won international arbitrations against the levy of retrospective tax on them
– The government has proposed to refund the amount paid in these cases without any interest
Tribune News Service
New Delhi, August 6
The Lok Sabha today passed without any discussion Taxation Laws (Amendment) Bill, 2021 that aims to nullify the relevant retrospective tax clauses introduced in 2012 to bring past indirect transfer of Indian assets under the ambit of taxation amid Opposition protests on Pegasus snooping row and three Central farm laws.
“The Bill is being brought to keep the word given by former Finance Minister Arun Jaitley under the leadership of Prime Minister Narendra Modi, keeping the commitment of BJP and that we don’t believe in retrospective collection of tax. We are fulfilling that word,” said Finance Minister Nirmala Sitharaman while moving the legislation for consideration and passage amid the din.
Sitharaman said after coming to power in 2014, Jaitley had “clearly made a commitment in the House and that we don’t believe in applying the law in retrospect and we would certainly form a high-level committee which will look into all such cases”. She said between 2014 and today, the committee dealt with this matter, and “we have not had one claim based on the amendment made in 2012.”
She said for cases prior to 2012, for which it was retrospectively applied, there were 17 such cases. “Of these, two went to the court and the claims could not be pursued further.
“As promised by then Finance Minister Arun Jaitley, in principle we don’t believe in this. However, we couldn’t act on this even in 2014 because there were two cases going on,” she said.
According to Sitharaman, like former FM Jaitley said, the government waited for them to reach a logical conclusion which was arrived in September 2020 in one case and in December 2020 in another.
The amendment had attracted widespread criticism, especially from international quarters, on the ground that the retrospective effect militates against the principle of tax certainty with some also calling it “a sore point with potential investors”.
