FinMin likely to accept Shome panel reccos: Sources

After the Shome panel called for doing away with retrospective tax, CNBC-TV18’s Aakansha Sethi reports, quoting sources, that the finance ministry is likely to accept the recommendations.

Most of these companies will be refunded if the government accepts the Shome Committee recommendations on the retrospective amendment. Sources indicate that the government is likely to accept both reports submitted by the Shome panel- on the GAAR deferment and on retrospective amendment.
Once these reports are accepted by mid-November and the government is likely to move amendments to the Finance Bill in the Winter Session. However, the process is not going to be a short one as there is the possibility that it be submitted before a standing committee and hence, the actual amendment could take some time.
But the government is keen to bring in certainty for investors on the tax front and wants to move as quickly as possible.
Once Section 9 of the retrospective amendment law becomes prospective then there will be no basis for companies that paid tax under protest or that are under litigation in various courts in the country to have paid tax, and according sources, the money will be refunded.
However the refunds do not seem to be a very large amount, because of the total amount of about Rs 35,000 crore Vodafone’s dues, including the penalty and interest, constitute Rs 20,000 crore.
Considering that Vodafone’s principal amount has already been refunded, the burden on the government will only be about Rs 13,000 crore which is something that the government will have to think twice about, considering the strain on the fisc.