New Delhi: Retrospective Tax Law: The Central Government has decided to do away with the disputed tax, in which there was a provision to collect tax from the companies from the previous date, it is called Retrospective Tax. The Central Government on Thursday introduced the Taxation Laws (Amendment) Bill, 2021. After the passage of this bill, the disputed law levying tax from the previous date will end.
Finance Ministry will amend the law
The Finance Ministry told in the Lok Sabha that for this amendment has been proposed in the Income Tax Act, 1961, after the passage of this bill, retrospective tax will not be demanded from any company in future. After the amendment in the Income Tax Act, this rule for companies will be the same as before 28 May 2012. Finance Minister Nirmala Sitharaman said that the government has also proposed that the tax collected in these cases will be refunded along with interest.
This move of the government will directly benefit companies like Cairn Energy and Vodafone, with whom the tax dispute has been going on for a long time. Both the companies had challenged this dispute tax law in court.
What is retrospective tax
This is a tax that is also collected from the previous date, that is, if a company has done a deal earlier, but if any tax is made today, then tax on that deal will be charged from the day when that deal was done. Sometimes it also happens that companies have paid tax according to the previous laws, but the government feels that it has paid less tax according to the existing policy and law, then it demands more tax from it. On May 28, 2012, the Finance Bill, 2012 was approved by Parliament, which said that indirect transfers of Indian assets before May 2012 would be retrospectively taxed.
Disputes will end with the law
The biggest benefit from this move of the government will be for companies like British company Cairn and Vodafone. These companies have filed cases against this law in India and in the International Court, now these cases can also be withdrawn. In this way, if this controversial law of about a decade old ends, then these disputes will also end with it and a better business environment will also be created in India. Let us tell you that in December last year, the Government of India lost the case of retrospective tax to Cairn in the Permanent Court of Arbitration of Hogg. After which the government has to return $ 1.4 billion to Cairn.