Here are Shome Panel proposals on retro amendment

The Shome Committee has proposed several recommendations, including exemption of FIIs, P-notes, portfolio investments and much more from retrospective amendment. CNBC-TV18's Aakansha Sethi reports.  

One of the significant overhangs after the Budget this year was the Section 9 retrospective amendment and no less than the Prime Minister himself had setup a committee headed by Dr. Parthasarathi Shome to look into this.
CNBC-TV18 learns from sources that the panel has considerably sweetened the deal as far as the retrospective amendment is concerned. Dr Shome has said that retrospective amendments are banned in several countries and they create tax uncertainty. Therefore, he says, such amendments are not a good idea, but adds, no recommendation has been made for perspective since that was not the mandate of the committee.
The panel has also recommended that listed companies’ P-notes, stock market transactions be kept out of the ambit of the Section 9 retrospective amendment as well as FIIs. Shome has also said that when there is a transfer between two non-residents and the underlying asset is in India the transfer has to be above 50 percent of assets for the deal to be liable to be taxed in India. He has also defined substantial interest as 50 percent of assets. He has also said that deals such as Vodafone dispute, the tax dispute should be resolved by a penalty and interest waiver for all such companies.
The Central Board of Direct Taxes (CBDT) is preparing its views on the Shome Committee Report which they are going to submit to the Finance Minister and they are of the view that when there is an indirect transfer above 10 percent should be liable to tax in India instead of the 50 percent that the Shome Committee has recommended. They have also said that the retrospective amendment is only a clarificatory amendment and there have been several retrospective amendments in the budget and a complete penalty and interest waiver for all companies that have been impacted by it will not be a good idea.
It remains to be seen what final decision the Finance Minister takes and when he actually makes this public so that it is open to feedback, because that would be key in the Finance Minister building his final views on this and in the resolution of the Vodafone dispute as well as the resolution of the unintended consequences of Section 9. We have told you that withdrawing the amendment in the winter session is now emerging as a distinct possibility.