Govt will amend retro tax with caution: FM
11 July 2014 6:12 AM IST
Assuring investors that retrospective amendments to tax laws will be undertaken with extreme caution, Finance Minister Arun Jaitley on Thursday said all fresh cases arising out of the 2012 amendment of I-T Act will be looked into by a high level CBDT committee.
However, the existing tax disputes, arising out of Retrospective Amendment to the Income tax Act, 1961, and are pending in courts, will be allowed to reach their logical conclusions, he said.
‘The sovereign right of the government to undertake retrospective legislation is unquestionable. However, this power has to be exercised through extreme caution and judiciousness keeping in mind the impact of each such measure on the economy and the overall investment climate.
‘This govt will not ordinarily bring any change retrospectively which creates a fresh liability,’ Jaitley said while presenting the Budget for 2014-15.
He said consequent upon the retrospective amendment of the I-T Act, 1961, undertaken by Finance Bill of 2012, a few cases have come up in various courts and legal fora. ‘These cases are at various stages of pendency and will naturally reach their logical conclusion,’ he said. He said the BJP-led NDA government is committed to providing a stable and predictable taxable regime which would be investor friendly and spur growth.
‘...Henceforth all cases arising out of retrospective amendment of 2012 in respect of indirect transfer and coming to the notice of Assessing Officers will be scrutinised by a high level committee to be constituted by the CBDT (Central Board of Direct Taxes) before any action is initiated in such cases,’ he added. Jaitley hoped the investor community, both within the country and abroad, will repose confidence in India and participate in the growth story with renewed vigour.
Amendment to the IT Act with retrospective effect, undertaken by the UPA government in 2012 to protect revenue, had evoked sharp reactions from domestic as well as global investors.
Following the amendment to the tax laws, the authorities issued a letter to Vodafone International Holdings BV stating that the company was required to pay tax demand of about Rs 11,217 crore along with interest.
Besides, an Income-Tax Department’s order in January this year held that Edinburgh-based Cairn Plc made capital gains of Rs 24,503.50 crore when it transferred its entire India business from subsidiaries incorporated in Jersey, a tax haven, to the newly incorporated Cairn India in 2006.
Arbitration plan to stay: Tax-dodging British co Vodafone
Telecom major Vodafone, which is locked in a Rs 20,000-crore tax dispute, on Thursday said it will continue with the arbitration process as the government has decided not to drop retrospective tax laws in existing cases. ‘We note the Finance Minister’s announcement that all existing cases arising from the 2012 retrospective tax law should follow the lawful process in which they are currently being adjudicated. ‘Vodafone will, therefore, continue the process of international arbitration initiated under the India- Netherlands bilateral investment treaty,’ the telecom major said in a statement.
However, the existing tax disputes, arising out of Retrospective Amendment to the Income tax Act, 1961, and are pending in courts, will be allowed to reach their logical conclusions, he said.
‘The sovereign right of the government to undertake retrospective legislation is unquestionable. However, this power has to be exercised through extreme caution and judiciousness keeping in mind the impact of each such measure on the economy and the overall investment climate.
‘This govt will not ordinarily bring any change retrospectively which creates a fresh liability,’ Jaitley said while presenting the Budget for 2014-15.
He said consequent upon the retrospective amendment of the I-T Act, 1961, undertaken by Finance Bill of 2012, a few cases have come up in various courts and legal fora. ‘These cases are at various stages of pendency and will naturally reach their logical conclusion,’ he said. He said the BJP-led NDA government is committed to providing a stable and predictable taxable regime which would be investor friendly and spur growth.
‘...Henceforth all cases arising out of retrospective amendment of 2012 in respect of indirect transfer and coming to the notice of Assessing Officers will be scrutinised by a high level committee to be constituted by the CBDT (Central Board of Direct Taxes) before any action is initiated in such cases,’ he added. Jaitley hoped the investor community, both within the country and abroad, will repose confidence in India and participate in the growth story with renewed vigour.
Amendment to the IT Act with retrospective effect, undertaken by the UPA government in 2012 to protect revenue, had evoked sharp reactions from domestic as well as global investors.
Following the amendment to the tax laws, the authorities issued a letter to Vodafone International Holdings BV stating that the company was required to pay tax demand of about Rs 11,217 crore along with interest.
Besides, an Income-Tax Department’s order in January this year held that Edinburgh-based Cairn Plc made capital gains of Rs 24,503.50 crore when it transferred its entire India business from subsidiaries incorporated in Jersey, a tax haven, to the newly incorporated Cairn India in 2006.
Arbitration plan to stay: Tax-dodging British co Vodafone
Telecom major Vodafone, which is locked in a Rs 20,000-crore tax dispute, on Thursday said it will continue with the arbitration process as the government has decided not to drop retrospective tax laws in existing cases. ‘We note the Finance Minister’s announcement that all existing cases arising from the 2012 retrospective tax law should follow the lawful process in which they are currently being adjudicated. ‘Vodafone will, therefore, continue the process of international arbitration initiated under the India- Netherlands bilateral investment treaty,’ the telecom major said in a statement.
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