New Delhi, August 9: The Taxation Laws (Amendment) Bill, 2021 has been passed by the Rajya Sabha today, i.e. on August 9. It had been passed by the Lok Sabha on August 6, 2021. With this, the law did away with the contentious retrospective tax after more than nine years since its introduction. This means the bill aims to end all retrospective taxation imposed on the indirect transfer of Indian assets. The bill states that "no tax demand shall be raised in future on the basis of the said retrospective amendment for any indirect transfer of Indian assets if the transaction was undertaken before May 28, 2012."

The Taxation Laws (Amendment) Bill 2021 was introduced after India lost retrospective tax demand cases against Cairn Energy Plc. and Vodafone. The Centre had challenged the verdict in both these cases. Reports inform that the Bill seeks to amend the Income Tax Act to effectively withdraw tax demands made by India on 17 firms including Vodafone and Cairn Energy, on the capital gains from deals prior to May 28, 2012. Taxation Laws Bill 2021: Govt Buries Retro Tax, Introduces New Bill in Lok Sabha to Withdraw Demands on Cairn Energy Plc, Vodafone.

The Taxation Laws (Amendment) Bill, 2021

The Bill proposes to amend the Income-tax Act, 1961 so as to provide that no tax demand shall be raised in future on the basis of the said retrospective amendment for any indirect transfer of Indian assets if the transaction was undertaken before May 28, 2012 (i.e., the date on which the Finance Bill, 2012 received the assent of the President).

Salient Features of 'The Taxation Laws (Amendment) Bill, 2021'

  1. The Taxation Laws (Amendment) Bill, 2021 provides that no tax demand shall be raised in the future based on the retrospective amendment made through the Finance Act, 2012, for any indirect transfer of Indian assets if the transaction was undertaken before 28th May, 2012.

  2. Provides that the demand raised for indirect transfer of Indian assets made before 28th May 2012, shall be nullified on fulfillment of specified conditions and on furnishing of an undertaking

  3. Proposes to refund the amount paid in these cases without any interest thereon.

  4. Proposes to amend Finance Act, 2012 so as to provide that the validation of demand under section 119 of Finance Act, 2012 shall cease to apply on fulfillment of specified conditions & on furnishing of an undertaking.

  5. Empowers CBDT to make rules to provide the form and manner in which an undertaking shall be submitted.

Here's the tweet by the Income Tax Department of India:

As 'The Taxation Laws (Amendment) Bill, 2021' has been approved in both the houses of the Parliament, all tax demands made on companies like Cairn Energy and Vodafone using a 2012 legislation on indirect transfer of Indian assets prior to May 28, 2012 will be withdrawn.

To recall, India in January 2013 had slapped Vodafone with a tax demand of Rs 14,200 crore using that retrospective tax law, including principal tax of Rs 7,990 crore and interest. This was in February 2016 updated to Rs 22,100 crore plus interest. Reports inform that the country also slapped an assessment of `10,247 crore on Cairn Energy in January 2014, which after including penalties came to Rs 20,495 crore.

While the Rajya Sabha took up The Taxation Laws (Amendment) Bill, 2021 on Monday, August 9, the Opposition parties including the Congress, DMK and TMC staged a walkout, saying adequate time was not given to them to prepare for a discussion on the proposed legislation.

(The above story first appeared on LatestLY on Aug 09, 2021 06:50 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).