The Ministry of Law and Justice has notified the Taxation Laws (Amendment) Act, 2021 which allows cordial settlement of 17 tax disputes that arise from retrospective use of an anti-evasion provision introduced in 2012.
With this amendment, the government is aiming to settle the tax disputes with Cairn Energy Plc and the Vodafone Group.
According to the new act, all the tax claims -- made on offshore transactions executed prior to 28 May, 2012 -- will be termed as nullified. However, the offshore transactions involving Indian assets executed after May 28, 2012 are still taxable since there is no retrospective application of the law, reported LiveMint.
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The Act mentions the conditions for dropping the tax claims, which include withdrawal of pending litigation and agreeing not to raise any claim for cost, damages, interest, among other conditions, by the disputing party. The government will also refund the amount paid in those cases without any interest for amicable settlement of the disputes.
As per the revenue department's estimation, the total tax refund to be made for settling disputes arising from the 2012 retrospective change in income tax law stands at Rs 8,100 crore.
Earlier, the government had seized Cairn Energy's 10% residual shareholding in erstwhile Cairn India Ltd. The firm had later merged with Vedanta Ltd. While for Vodafone, the government of India had collected about ₹45 crore of taxes.
Through amicable settlement of the disputes, the government expects firms to come forward and settle the cases quickly.
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