New Delhi: The government on Thursday moved to bury the retrospective tax ghost by trying to change the law, a step expected to end vexatious litigation with 17 companies, including Vodafone and Cairn, in addition to overcoming criticism of the uncertainty of the policy regime in the country.
Amendment, transferred by Minister of Finance Nirmala Sitharaman, seeks to empower the government to withdraw its request in cases related to transactions that occur before 28 May 2012 (when the President clears financial actions that allow retrospective taxation), and for refund money that has been collected in Some cases.
However, he comes with motorists that companies must withdraw all cases and do not demand interest in returned money.
In 2012, Pranab Mukherjee, then the Minister of Finance, has changed the laws retrospectively to collect taxes on transactions related to companies with underlying assets in India, although buyers and sellers may not have a direct presence in the country.
The amendment came after the government upa lost a case in the Supreme Court arising from the acquisition of Vodafone from ownership of 67% in Indian telecommunications companies from Hong Kong Whampoa Hutchison.
In this case, Dutch Affiliation Vodafone bought shares from a company registered in the Cayman Islands, which directly and indirectly held shares in Hutch Essar in India.
Amendments have produced companies that are looking for international arbitration.
Last year, the government received two detrimental decisions in cases involving Vodafone and Cairn PLC.
The Modi government, who took over from the UPA, said that it was against retrospective amendments in principle but so far did not bring down litigation initiated by its predecessor.
However, the development of Thursday marks a clean break from the UPA stand.
The government’s sources say this step is intended to send positive messages to the investor community and mark the “landmark decision to reverse the previous policy” the same as the cancellation of Article 370 two years to date.
The development was suddenly when the Minister of Finance arrested the business and policy was surprised when he moved the bill at Lok Sabha after being registered in the business complement list.
Although there is no amount to be paid to Vodafone, Cairn will be eligible for a refund as far as shares sold by the tax department to recover tax claims.
The two companies did not comment on the amendment, but the tax expert welcomed the law.
“This is a step welcome to foreign investors and in line with the government’s commitment to create a non-hostile tax environment.
Amendments to cancel the retrospective application of indirect taxes India assets in 2012.
The tax request made will drop and the collected tax will be returned, with Certain warnings that include pending litigation withdrawals and no interest claims for taxes paid or claim all costs or damage.
It seems good opportunities for taxpayers who are affected to cover all disputes and avoid.
Litigation costs in the future, “said Sudhir Kapadia, national tax leader at Ey India.
Although consideration of interest can weigh on several companies, which have paid a portion of tax demand, analysts estimate that it becomes mild irritant.
“With the proposed change, the Indian government does not only stand on the ground not to introduce a retrospective tax amendment but also deal with the main ones and not valued by the investor community.
This will bring a lot of stability in foreign minds investors see investing or entering India for the term Long, “said Amrish Shah, partnered in Deloitte India.