Income Tax Act New Delhi/UNI: The government has framed draft rules to implement the recent amendment in Income Tax Act to scrap retrospective tax provisions.
The draft rules specifying the conditions to be fulfilled and the process to be followed to give effect to the amendment have been placed in the public domain for comments and suggestions by September 4, 2021.
"To implement the amendment made by 2021 Act, draft rules have been prepared to amend the Income-tax Rules, 1962 which specify the conditions to be fulfilled and the process to be followed to give effect to the amendment made by the 2021 Act," said an official statement from central Board of Direct Taxes (CBDT).
The Parliament had passed the Taxation Laws (Amendment) Bill, 2021 during the Monsoon session, seeking to nullify controversial retrospective tax provision introduced in 2012 during the UPA government.
The move is aimed at ending tax disputes with Vodafone, Cairn Energy and over a dozen other companies besides facilitating fresh foreign investment.
Subsequent to the amendment in Income Tax Act in 2012 applying the provision retrospectively, income-tax demand had been raised in 17 cases. In two cases assessments are pending due to stay granted by High Court.
Out of the 17 cases, arbitration under Bilateral Investment Protection Treaty with the United Kingdom and the Netherlands had been invoked in four cases. In two cases, the Arbitration Tribunal ruled in favour of the taxpayer and against the Income Tax Department.
The Taxation Laws (Amendment) Act, 2021 (2021 Act) has now amended the Income-tax Act, 1961 (Income-tax Act) so as to provide that no tax demand shall be raised in the future on the basis of the amendment to section 9 of the Income-tax Act made vide Finance Act, 2012 for any offshore indirect transfer of Indian assets if the transaction was undertaken before 28th May, 2012.
Accordingly, demand raised for indirect transfer of Indian assets made before 28th May, 2012 shall be nullified on companies meeting certain conditions such as withdrawal of pending litigation and furnishing of an undertaking to the effect that no claim for cost, damages, interest, etc., shall be filed.
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