In a nutshell, shares of the target Indian Company were acquired through a Holding Company structure in tax-friendly jurisdictions such as Mauritius, Cayman Islands and Singapore. In the early 2000s with respect to cross border transactions, various treaty shopping tax structures were being used by foreign companies to make investments in India. It would be germane to understand the genesis of the retrospective tax controversy. Genesis of the Retrospective Tax Controversy The taxpayer will need to withdraw any arbitration or appeal from the relevant court and submit an undertaking to not seek any other remedy or claim. The assessment orders in respect of income accruing as a consequence of transfers made before 28-02-2012 will be treated as null and void. The cut-off date prescribed is 28th May, 2012.Īpproximately INR 8,100 Crore collected so far in retrospective tax, out of which INR 7,900 Cr is from Cairn UK, will be refunded to the respective taxpayers without interest. The Taxation Laws (Amendment) Bill, 2021 introduced on 5th August, 2021 proposes an amendment to 9(1)(i) of the Income Tax Act (“ITA”) that no tax demand is to be raised based on the retrospective amendment introduced in 2012 on indirect transfers of Indian assets. A very significant move by the Indian Government to reverse the controversial retrospective tax provisions introduced by the Finance Bill, 2012 circumventing the decision of the Honourable Supreme Court in the case of Vodafone International Holdings BV v.
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