Finance Minister Pranab Mukherjee in Budget 2012-13 proposed to amend the Income Tax Act, 1961 with retrospective effect.
The proposal was to allow the country to retrospectively tax cross-border transactions in which the underlying assets are located in India. Under the proposed amendment, all persons, whether resident or non-residents, having business connection in India, will be required to deduct tax at source and pay it to the government even if the transaction is executed on a foreign soil.
Following are the sections which were amended:
Section 2(14) - This provision defines a “capital asset”. - it is hereby clarified that ‘property’ includes and shall be deemed to have always included any rights in or in relation to an Indian company, including rights of management or control or any other rights whatsoever”