Assuring investors that retrospective amendments to tax laws will be undertaken with extreme caution, Finance Minister Arun Jaitley today said all fresh cases arising out of the 2012 amendment of I-T Act will be looked into by a high level CBDT committee. However, the existing tax disputes, arising out of Retrospective Amendment to the Income tax Act, 1961, and are pending in Courts, will be allowed to reach their logical conclusions, he said.
"The sovereign right of the government to undertake retrospective legislation in unquestionable. However, this power has to be exercised through extreme caution and judiciousness keeping in mind the impact of each such measure on the economy and the overall investment climate. This govt will not ordinarily bring any change retrospectively which creates a fresh liability," Jaitley said while presenting the Budget for 2014-15.
He said consequent upon the retrospective amendment of the I-T Act, 1961, undertaken by Finance Bill of 2012, a few cases have come up in various courts and legal fora. "These cases are at various stages of pendency and will naturally reach their logical conclusion," he said.
He said the BJP-led NDA government is committed to providing a stable and predictable taxable regime which would be investor friendly and spur growth. "...Henceforth all cases arising out of retrospective amendment of 2012 in respect of indirect transfer and coming to the notice of Assessing Officers will be scrutinised by a high level committee to constituted by the CBDT (Central Board of Direct Taxes) before any action is initiated in such cases," he added.
Jaitley hoped the investor community, both within the country and abroad, will repose confidence in India and participate in the growth story with renewed vigour.
Amendment to the IT Act with retrospective effect, undertaken by the UPA government in 2012 to protect revenue, had evoked sharp reactions from domestic as well as global investors. Following the amendment to the tax laws, the authorities issued a letter to Vodafone International Holdings BV stating that the company was required to pay tax demand of about Rs 11,217 crore along with interest. Besides, an Income-Tax Department's order in January this year held that Edinburgh-based Cairn Plc made capital gains of Rs 24,503.50 crore when it transferred its entire India business from subsidiaries incorporated in Jersey, a tax haven, to the newly incorporated Cairn India in 2006.
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