Following the choice to scrap the retrospective taxation provision, the Income Tax Department on Saturday launched guidelines that can assist shut tax calls for in opposition to corporations resembling Cairn Energy and Vodafone Plc.
The guidelines present particulars for corporations to present an ‘irrevocable’ enterprise to withdraw all authorized circumstances in opposition to the federal government in addition to an enterprise to not pursue any in future.
Earlier this month, the Centre had introduced in The Taxation Laws (Amendment) Act 2021 stating that no tax demand shall be raised for any oblique switch of Indian belongings if the transaction was undertaken earlier than May 28, 2012.
The authorities had, in 2012, retrospectively amended the Income-tax Act. This was in response to a Supreme Court verdict, which had held that Vodafone can’t be taxed for a 2007 transaction that concerned its buy of a 67 per cent stake in Hutchison Whampoa for $11 billion. Later in 2014, the Centre used the identical part to lift tax demand in opposition to Cairn Energy Plc for restructuring achieved in 2006. After the retrospective modification moved by the UPA-led authorities in 2012, tax calls for have been raised in 17 circumstances, out of which tax quantity of Rs 8,100 crore has been collected for 4 circumstances.
“The amendment made by 2021 Act also provides that the demand raised for offshore indirect transfer of Indian assets made before 28th May, 2012 (including the validation of demand provided under Section 119 of the Finance Act 2012) shall be nullified on fulfillment of specified conditions such as withdrawal or furnishing of undertaking for withdrawal of pending litigation and furnishing of an undertaking to the effect that no claim for cost, damages, interest, etc. shall be filed and such other conditions are fulfilled as may be prescribed,” the tax division stated in a press release.
The quantity paid/collected in these circumstances shall be refunded, with none curiosity, on achievement of the stated situations, it stated, including a draft of the enterprise is being launched for feedback.
The declaration supplies for a corporation to “irrevocably withdraw, discontinue and not pursue” any current or future authorized problem in opposition to the tax demand.
The division has invited ideas and feedback on the draft notification of the principles, which will be submitted by September 4.