- This law was implemented in 2012 by the then Finance Minister Pranab Mukherjee.
- In retrospective taxation, the tax becomes effective before the date of passing of the law.
- Under this law, the Government of India sent a tax demand to Cairn Energy and Vodafone.
retrospective tax law (Retrospective tax lawThe government is going to end it after 9 years. The government on Thursday introduced the Taxation Laws (Amendment) Bill, 2021. After the passage of this bill, the disputed law levying tax from the earlier date will be abolished. Controversy arose over this law. India’s reputation for attracting foreign investment was also hit. Actually, this law was implemented by the then Finance Minister Pranab Mukherjee. This law was a stain on them. Many tax experts had also raised questions on this.
What is the law and why did the dispute happen?
Retrospective taxation is the process in which the tax becomes effective before the date of passing of the new law. This tax is imposed by the Income Tax Department on companies. The law to levy tax with an earlier date was made in 2012. That time Pranab Mukherjee Was the finance minister of the country. He made changes in the Finance Act. Due to changes in the Finance Act, the Income Tax Department got the power of retrospective tax.
Under this law, the Government of India established the British Company. cairn energy And Vodafone Tax demand was sent to Both the companies had challenged the Indian government’s demand for tax in the court. After a long legal battle, both the companies have won.
Vodafone entered the Indian market in 2007 by buying Hutchison Whampoa. Vodafone bought a 67 percent stake in Hutch for $11 billion at the time. The deal includes Hutch’s Indian telephone business and other assets. In the same year, the government told Vodafone that it would have to pay Rs 7990 crore as capital gains and withholding tax. In such a situation, Vodafone should deduct this money as tax before payment.
Vodafone reached the Bombay High Court against this claim of income tax. The court ruled in favor of the Income Tax Department. Later the matter reached the Supreme Court. In 2012, the Supreme Court held that buying a stake in Vodafone does not create tax liability. The meaning of the Income Tax Act 1961 he has interpreted is correct.
Cairn had launched an IPO in 2007 to get its company listed in India. A year earlier, it had merged several of its units in India with Cairn India. But this did not change their ownership. Cairn had taken permission from the Foreign Investment Promotion Board (FIPB) for this. Seven years later, the tax department in India sent a notice of capital gains tax on him. It told Cairn in 2014 that it had merged several of its units with Cairn India before the IPO. This earned him capital gains. So he has to pay tax. Cairn went to court against it.
In India, the Tax Department took over 10 percent of Cairn India’s shares in lieu of arrears of more than 10 thousand crores (Capital Gains Tax). After hearing this case, the Arbitration Court of The Hague in the Netherlands ruled against the Indian government. He directed Cairn to repay this amount along with interest.
What has the government done to ease corporate tax filing