Bill to scrap the law tabled; proposed refund at around Rs 8,100 crore
Putting an end to the contentious retrospective tax law that hit the confidence of foreign investors, including Vodafone and Cairn, for years, Finance Minister Nirmala Sitharaman on Thursday introduced a Bill in Parliament to nullify the provision in the Income Tax Act.
The government has also proposed to refund the amount paid in litigation by companies without any interest thereon. Finance Secretary T V Somanathan told Business Standard that the total amount involved for all cases is about Rs 8,100 crore, of which about Rs 7,900 crore is related to the Cairn dispute.
The Bill would withdraw the retrospective amendments to the Income Tax Act that had raised demands on Vodafone, Cairn and some others, indicating a move to attract foreign investments.
This comes soon after Aditya Birla Group Chairman Kumar Mangalam Birla offered to transfer the group’s ownership in Vodafone Idea to the government in a last-ditch effort to keep the cash-strapped telco from collapsing. Vodafone plc has maintained it would not throw good money after bad.
Sitharaman said the country was at a juncture when quick recovery of the economy was the need of the hour. Foreign investment would play an important role in promoting faster economic growth and employment, she added.
“It is argued that such retrospective amendments militate against the principle of tax certainty and damage India's reputation as an attractive destination,” the statement on the objects and reasons of the Bill reads.
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