No debate, LS passes Bill to scrap retro taxes

Tribune News Service

New Delhi, August 6

The Lok Sabha today passed without any discussion Taxation Laws (Amendment) Bill, 2021, that aims to nullify the relevant retrospective tax clauses introduced in 2012 to bring past indirect transfer of Indian assets under the ambit of taxation amid Opposition protests on Pegasus snooping row and three Central farm laws. “The Bill is being brought to keep the word given by former Finance Minister Arun Jaitley under the leadership of Prime Minister Narendra Modi, keeping the commitment of BJP and that we don’t believe in retrospective collection of tax. We are fulfilling that word,” said Finance Minister Nirmala Sitharaman while moving the legislation for consideration and passage amid the din.

Also read: Editorial: Retrospective tax

She said there were 17 such cases prior to 2012 for which the law was retrospectively applied. “Of these, two went to the court and the claims could not be pursued further. As promised by then FM Jaitley, in principle we don’t believe in this. However, we couldn’t act on this even in 2014 because there were two cases going on,” she said.

According to Sitharaman, like former FM Jaitley said, the government waited for them to reach a logical conclusion, which was arrived in September 2020 in one case and in December 2020 in another.

Its significance

Will impact retro tax cases of at least two big companies—Cairn & Vodafone

Will boost confidence among potential investors

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The amendment had attracted widespread criticism, especially from international quarters, on the ground that the retrospective effect militates against the principle of tax certainty with some also calling it “a sore point with potential investors”.

The House also passed in a jiffy the Central Universities (Amendment) Bill, 2021.