The Hon’ble Finance Minister (“FM”) in the Lok Sabha introduced the Taxation Law (Amendment) Bill, 2021 dated August 05, 2021 (“the Amendment Bill”) seeks to withdraw the contentious retrospective tax brought by the Finance Act, 2012 (“the Finance Act”).
The Amendment Bill proposes to amend the Income-tax Act, 1961 (“the IT Act”), to provide that no tax demand shall be raised in the future on the basis of the retrospective amendment of taxing capital gains arising from any indirect transfer of Indian assets if the transaction was undertaken before May 28, 2012.
The Amendment Bill also proposes to refund the full amount of tax but without interest as a specific provision under Section 244A of the IT Act inserted for no interest on such refund.
The Amendment Bill also proposes to amend the Finance Act, to provide that the demand raised for indirect transfer of Indian Assets under Section 119 of the Finance Act made before May 28, 2012 shall cease to apply on fulfilment of specified conditions such as withdrawal or furnishing of undertaking for withdrawal of pending litigation and furnishing of an undertaking that no claim for cost, damages, interest, etc., shall be filed.
The Amendment Bill is a very pragmatic step by the Government of India to help in the widespread litigation in cases like Vodafone and Cairn.
The Amendment Bill can be accessed at: http://www.a2ztaxcorp.com/wp-content/uploads/2021/08/Taxation-Law-Amendment-Bill-2021.pdf