The Indian government has decided to do away with the retrospective tax law of 2012 that was used to demand large taxes from foreign investors. Finance Minister Nirmala Sitharaman introduced The Taxation Law (Amendment) Bill in the Lok Sabha on August 5, nullifying the relevant retrospective tax clause of 2012 to bring past indirect transfer of Indian assets under the ambit of taxation.
The new amendment nullifies the tax demand on transactions that took place before May 2012, and any taxes collected will be repaid without any interest. The concerned taxpayer needs to drop any pending case against the government and need to promise not to make any further demands for damage or cost.
Separate international arbitration tribunal verdict in the Vodafone and Cairn cases was against India’s retrospective tax demands. The India Government had said it will honour the legal process and have given appeals against the verdicts.