:The Union government on Thursday amended the Income Tax Act to end controversial retrospective tax demand. The move came after back-to-back setbacks in Cairn energy and Vodafone Group tax dispute cases. An Ordinance was introduced in Lok Sabha to scrap the dreaded retrospective changes made in Finance Act, 2012. The central government proposed that no retro tax demand will be made if transaction is done before May 28, 2012.
“Bill proposes to amend I-T Act, so as to provide that no tax demand shall be raised in future on basis of said retrospective amendment for any indirect transfer of Indian assets if transaction before 28th May, 2012,” said government.
“In the past few years, major reforms have been initiated in the financial and infrastructure sector which has created a positive environment for investment in the country. However, this retrospective clarificatory amendment and consequent demand created in a few cases continues to be a sore point with potential investors. The country today stands at a juncture when quick recovery of the economy after the COVID-19 pandemic is the need of the hour and foreign investment has an important role to play in promoting faster economic growth and employment,” government further said.
“The Ordinance introduced by government is a welcome step in resolving the pending disputes at various forums including international forum. With the introduction of taxation of indirect transfers with retrospective effect in 2012, the tax department reopened the assessment in few cases citing the said retrospective amendments. The said cases had been pending in different high courts and in some cases in arbitration. Now with this Ordinance, the tax department will not treat the said assesses as in default provided the pending litigation is withdrawn. This effectively resolves the dispute,” Amit Singhania, partner, Shardul Amarchand Mangaldas & Co.
With inputs from News18
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