INSUBCONTINENT EXCLUSIVE:
Nirmala Sitharaman has said that rules are being made to scrap retrospective tax demandsFinance Minister Nirmala Sitharaman on Monday said
rules that will facilitate scrapping of retrospective tax demands made on companies like Cairn Energy Plc and Vodafone Plc will be framed
soon."Rules will have to be framed..
rules will be famed soon, she told media persons."During the recently concluded Monsoon session, Parliament had passed a bill to scrap a tax
rule that gave the tax department power to go 50 years back and slap capital gains levies wherever ownership had changed hands overseas but
business assets were in India.The 2012 legislation was used to levy a cumulative of Rs 1.10 lakh crore of tax on 17 entities, including UK
telecom giant Vodafone.The bill provides for the government to refund the retro tax to companies provided all legal challenges are
withdrawn.The government has to refund about Rs 8,100 crore that it had collected using the retro tax law
The bulk of this - Rs 7,900 crore is to Cairn Energy alone.While in other cases, it did not take punitive measures to recover the tax
demand, the Income Tax department sold Cairn's almost 10 per cent shareholding in its erstwhile Indian subsidiary and also seized its
dividends totalling Rs 1,140 crore and stopped tax refunds of Rs 1,590 crore.Cairn challenged the tax demand before an international
arbitration tribunal, which in December last year overturned the same and ordered the government to refund the money collected.Vodafone too
had received a favourable arbitration award against levy of Rs 22,100 crore tax.In both cases, the government appealed against the
awards.Asked if the government will withdraw the challenge to the awards after the passage of the law, Ms Sitharaman said, "I will follow
the law passed in Parliament.""I will follow the features of the legislation
Nothing beyond that," she said without elaborating.The Finance Minister said that her ministry officials are discussing with Cairn,
Vodafone on the closure of retro tax cases, refund and settlement."No discussions with me (have happened) so far," she said.
