The bill proposed to amend the Income Tax Act,1961 so as to provide that, no tax demand shall be raised in the future on the basis of the said retrospective amendment for any indirect transfer of Indian assets if the transaction was undertaken before May 28, 2012.
Effect of Taxation Laws (Amendment) Bill, 2021
After this bill, any demand created before May 28, 2012, will be nullified. Actually, this bill is a win-win for both the companies as well as for the Government. This step would bring a lot of certainty and confidence among the investors. Investors used to think about it multiple times before investing in India by considering the retrospective step, now it is going to end that insecurity and will settle down a lot of litigation and unnecessary disputes.
In 2012, at the time of imposition of retrospective tax lot of countries were not in favor of India’s decision, they considered this provision as a breach of tax treaty. Now this bill will help India in the restoration of worldwide reputation, investor attraction, and revival of the Indian Economy.
The move of the Indian government to redact, nullify and obliterate retrospective taxation is commendable, exemplary and laudable wherein restrictive recourse to abnormally tax entities through back route is immersed and buried on the lines of propriety, moral rectitude and probity.