New Delhi: The government will settle almost all the retrospective tax cases this month, closing a chapter that plagued India's reputation as an investment-friendly destination, a top official said on Friday.
A 2012 amendment that gave taxmen powers to go back 50 years and slap capital gains levies wherever ownership had changed hands overseas but business assets were in India, was used to raise Rs 1.1 lakh crore demand against multi-nationals such as telecom group Vodafone, pharmaceuticals company Sanofi and brewer SABMiller, now owned by AB InBev, and Cairn Energy Plc. Such demands brought uncertainty in the minds of investors.
To repair India's damaged reputation as an investment destination, the government in August 2021 enacted a new legislation to drop all such demand and refund about Rs 8,100 crore collected on the condition that any pending lawsuit or legal challenge against the government anywhere in the world would be dropped.
Cairn, from whom Rs 7,900 crore was seized to enforce the retrospective tax demand, as well as Vedanta Group, have dropped lawsuits. Cairn is now eligible for the tax refund.
"In the month of August, we abolished the retrospective taxation and we would be settling almost all the cases this month itself. So, we will close that chapter once and for all," Revenue Secretary Tarun Bajaj said.
The move will help restore investor confidence by providing a predictable and stable tax regime.
"So stability, predictability and not giving any surprise is a matter of tax policy which we have implemented," he said at a PHD chamber
event here.
Moreover, an unbelievingly low Rs 31,500 per return is all the tax that non-salaried and non-corporate tax filers such as proprietorships, limited liability partnerships and partnership firms pay, Revenue Secretary said, emphasising the need to expand the tax base in this segment.
Speaking at a post-Budget event, Revenue Secretary Tarun Bajaj said there have been some "very stark violations" of both direct and indirect tax laws by industry, and nudged industry chambers to be more proactive to see that such instances are minimised.
He said the Budget 2022-23 has not tinkered with individual taxes because the government wanted to spend more on infrastructure to boost the
economy.
"Maybe we will wait another year to improve the tax structure a little more," Bajaj said at the PHD Chamber event.
To a question regarding reduction in tax rates on proprietorship, LLPs and partnership firms, Bajaj said it can be looked at only when the tax base in this segment is expanded.
"...when I look at the figures, I find that if I don't include salaried class and corporates, the remaining segment if I look at the I-T return that came up in 2020-21 for which we have done an analysis, only Rs 31,500 per return was paid as tax.
"We also need to look at what is happening in that segment, may be a lot of informal business goes on there. But GST, the formalisation that we are doing, I am sure in times to come we will realise the benefits of formalisation of businesses, paying taxes...," Bajaj said.
He said both the direct and indirect tax departments have a lot of data which they are sharing among themselves.
"We have no intention of trying to give surprises to the corporate sector or the business sector," he said, adding now all the information that is available with the tax department is also shared with the taxpayer to help him file the return.