{"id":124273,"date":"2021-08-07T19:31:24","date_gmt":"2021-08-07T14:01:24","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=124273"},"modified":"2021-08-11T17:20:58","modified_gmt":"2021-08-11T11:50:58","slug":"does-bill-scrapping-retro-tax-go-far-enough-worries-are-the-no-interest-clause-later-i-t-interpretation","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/does-bill-scrapping-retro-tax-go-far-enough-worries-are-the-no-interest-clause-later-i-t-interpretation\/","title":{"rendered":"Does bill scrapping retro tax go far enough? Worries are the no interest clause, later I-T interpretation"},"content":{"rendered":"<div class=\"content-box-blue\">\n<p><strong>Source:<\/strong>\u00a0<a href=\"https:\/\/epaper.livemint.com\/Home\/ShareArticle?OrgId=682b1402aa&amp;imageview=0\" target=\"_blank\" rel=\"noopener\">The Hindu<\/a>, <a href=\"https:\/\/indianexpress.com\/article\/opinion\/editorials\/cairn-energy-income-tax-act-parliament-india-7442303\/\" target=\"_blank\" rel=\"noopener\">The Indian Express<\/a> and <a href=\"https:\/\/timesofindia.indiatimes.com\/blogs\/toi-edit-page\/does-bill-scrapping-retro-tax-go-far-enough-worries-are-the-no-interest-clause-later-i-t-interpretation\/\" target=\"_blank\" rel=\"noopener\">Times of India<\/a><\/p>\n<p><strong>Relevance:<\/strong> This article explains issues with the 2012 amendment which provide retrospective taxation and the challenges with the recent bill.<\/p>\n<\/div>\n<p><strong>Synopsis<\/strong>:<\/p>\n<p>Delayed reset on retrospective tax is only the first step to regaining investor confidence<\/p>\n<h5><strong>Introduction:<\/strong><\/h5>\n<p><span data-contrast=\"auto\">The government has recently introduced the Taxation Laws (Amendment) Bill, 2021, in Parliament.<\/span>\u00a0<span data-contrast=\"auto\">The bill seeks to nullify the contentious\u00a0<\/span><b><span data-contrast=\"auto\">retrospective tax law\u00a0<\/span><\/b><span data-contrast=\"auto\">by amending the<\/span><b><span data-contrast=\"auto\">\u00a0Income Tax (IT) Act<\/span><\/b><span data-contrast=\"auto\">\u00a0<\/span><b><span data-contrast=\"auto\">of 1961 and the Finance Act of 2012.<\/span><\/b><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<table style=\"border-collapse: collapse; width: 100%;\">\n<tbody>\n<tr>\n<td style=\"width: 100%;\"><strong>Read more<\/strong>: <a href=\"https:\/\/forumias.com\/blog\/retrospective-taxation-and-the-taxation-laws-amendment-bill-explained-pointwise\/\" target=\"_blank\" rel=\"noopener\">Retrospective taxation and the Taxation Laws (Amendment) Bill \u2013 Explained, pointwise<\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h5><strong>Evolution of retrospective taxation in India:<\/strong><\/h5>\n<ul>\n<li>Earlier, the Supreme Court had ruled against the retrospective reading of the law by tax officials in the case of Vodafone. Despite that, In 2012, the Indian\u00a0<strong>government then retrospectively amended the tax code<\/strong>, giving itself the power to go after\u00a0<strong>mergers and acquisitions(M&amp;A) deals all the way back to 1962 if the underlying asset was in India<\/strong>.<\/li>\n<li>The present government called the retrospective provisions a form of \u2018tax terrorism\u2019 and introduced a law to nullify them.<\/li>\n<\/ul>\n<h5><strong>Issues with the 2012 amendment:<\/strong><\/h5>\n<ol>\n<li>Immediately, several large transactions done by foreign companies prior to 2012 came into the tax officials net.<\/li>\n<li><strong>Foreign investors were naturally alarmed<\/strong> that the <strong>Indian government could go back in time and charge<\/strong> them for <strong>transactions legitimately done in the past<\/strong>.<\/li>\n<li>The arbitration cases internationally led to large <strong>awards upwards of $1 billion against India<\/strong>, including interest and damages.<\/li>\n<li>Further, the winning parties started enforcing their award in foreign courts and dented India&#8217;s image internationally.<\/li>\n<\/ol>\n<h5><strong>Challenges with the Bill:<\/strong><\/h5>\n<ul>\n<li>The Bill allows for the refund only of the principal amount in these cases, not the interest. But the Bill is <strong>silent on what if the companies are not ready to accept the payments without interest<\/strong>.<\/li>\n<li>Since the <strong>bill does not provide<\/strong> for the payment of any <strong>interest,\u00a0<\/strong>the companies might <strong>prefer the arbitration and litigation<\/strong> proceedings <strong>where<\/strong> <strong>they are likely to get the refund with interest<\/strong> at the market rate.<\/li>\n<li>Similarly, the government&#8217;s stand is also not mentioned in the bill, if the companies are not withdrawing the cases within India and abroad.<\/li>\n<li>Large entities like Cairn Energy Plc, Vodafone, etc have already <strong>received large arbitration awards in their favour<\/strong>. So, <strong>they might not give up<\/strong> the demands for the lower amount provided by the government.<\/li>\n<li>The bill also provides that apart from these conditions, <strong>further conditions may also be stipulated by CBDT<\/strong>. In the past, the <strong>CBDT and IT departments prefer to put stringent<\/strong> conditions.<\/li>\n<\/ul>\n<h5><strong>Conclusion<\/strong><\/h5>\n<p><strong>India needs to demonstrate greater clarity and consistency in policy<\/strong> across the board to fix its broken credibility.<\/p>\n<p>The government <strong>should allow, at the least, payment of interest<\/strong> on amounts that have been already recovered.<\/p>\n<div class=\"content-box-green\">\n<p><strong>Terms to know:<\/strong><\/p>\n<ul>\n<li><a href=\"https:\/\/forumias.com\/blog\/retrospective-taxation\/\" target=\"_blank\" rel=\"noopener\">Retrospective taxation<\/a><\/li>\n<li><a href=\"https:\/\/forumias.com\/blog\/what-is-tax-terrorism\/\" target=\"_blank\" rel=\"noopener\">Tax terrorism<\/a><\/li>\n<li><a href=\"https:\/\/forumias.com\/blog\/income-tax-act\/\" target=\"_blank\" rel=\"noopener\">Income Tax Act, 1961<\/a><\/li>\n<li><a href=\"https:\/\/forumias.com\/blog\/finance-act-2012\/\" target=\"_blank\" rel=\"noopener\">Finance Act, 2012<\/a><\/li>\n<\/ul>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Source:\u00a0The Hindu, The Indian Express and Times of India Relevance: This article explains issues with the 2012 amendment which provide retrospective taxation and the challenges with the recent bill. Synopsis: Delayed reset on retrospective tax is only the first step to regaining investor confidence Introduction: The government has recently introduced the Taxation Laws (Amendment) Bill,&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/does-bill-scrapping-retro-tax-go-far-enough-worries-are-the-no-interest-clause-later-i-t-interpretation\/\">Continue reading <span class=\"screen-reader-text\">Does bill scrapping retro tax go far enough? Worries are the no interest clause, later I-T interpretation<\/span><\/a><\/p>\n","protected":false},"author":10311,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,8778,8947,8788,8399,8948],"class_list":["post-124273","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-important-international-institutions","tag-international-disputes","tag-mobilisation-of-resources","tag-retrospective-taxation","tag-taxation-laws-amendment-bill-2021","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704853423},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/124273","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10311"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=124273"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/124273\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=124273"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=124273"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=124273"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}