Mumbai: The government in its maiden budget has abstained from taking an extreme position on abandoning the retrospective tax laws that were initiated after amending the Income Tax Act 1961 through the Finance Act 2012. The government has stated it will set up a high level committee to scrutinise all fresh cases of retrospective amendments of 2012, however the existing cases under various stages of pendency in courts will reach their legal recourse.
Arun Jaitely, the Union finance minister in his speech said, this government will not bring about any change retrospectively, which creates a fresh liability. However, a few cases have come up in various courts and other legal cases are at different stages of pendency which will reach their logical conclusion.
He added, “We are committed to provide a stable and predictable taxation regime that would be investor friendly. We have decided that henceforth, all fresh cases arising out of the retrospective amendments of 2012 in respect of indirect transfers will be scrutinised by a high level committee to be constituted by the CBDT before any action is initiated in such cases,” said Mr Jaitley.
Reacting to the announcement Vodafone Plc, which is fighting an international arbitration against the retrospective tax laws of 2012, said, it will continue the process of arbitration initiated under the India Netherlands Bilateral Investment Treaty.
“From the outset, we have maintained that there was no tax to pay – a view upheld by India’s Supreme Court – and the retrospective law in any case concerned tax on the gain made by Hutchison: Vodafone, as the buyer, clearly made no capital gain whatsoever,” said the statement issued by Vodafone.
