The ghost of retrospective tax resurrected by UPA II is finally being buried. The Lok Sabha approved the amendment to the Income Tax Act which means the the controversial retrospective tax law that led to row with Vodafone, Cairn Energy will be scrapped.
Finance Minister Nirmala Sitharaman introduced The Taxation Laws (Amendment) Bill in the Lok Sabha on Thursday. With this move, tax demands made on asset transfers prior to May 28, 2012 will be withdrawn.
"It is proposed to provide that the demand raised for indirect transfer of Indian assets made before 28th May, 2012 shall be nullified on fulfilment of specified conditions such as withdrawal or furnishing of undertaking for withdrawal of pending litigation and furnishing of an undertaking to the effect that no claim for cost, damages, interest, etc., shall be filed. It is also proposed to refund the amount paid in these cases without any interest thereon," the government stated.
This bill affects tax cases of at least two big companies Cairn Energy Plc and Vodafone Group of UK, both had won international arbitration cases against the tax levied on them.
The big question however many are asking are is this too late as after seven years, is the damage to India's international reputation been too severe?