- The Finance Ministry introduced the Taxation Laws (Amendment) Bill, 2021 in the Lok Sabha to nullify the effect of amendments brought by the Finance Act, 2012.
- The 2012 amendment was passed overturning the judgement of Vodafone International B.V V. Union of India & Anr., in which the Court held that gains from indirect transfer of Indian assets are not taxable under the provisions of Income Tax, 1961.
- The amendment also brought changes to the Income Tax, 1961 with retrospective effects, stating that gains from the sale of shares of a foreign company will be taxable in India, if such shares derive their value from assets located in India.
TAXATION LAWS AMENDMENT BILL
- The Bill is introduced to repeal the retrospective effect of the amendments made by the Finance Act, 2012.
- It also aims to amend the Income Tax Act, 1961 to provide that no tax shall be demanded in future for any indirect transfer of Indian assets if the transaction was made before 2012.
- It also amends the amended Section 119 of the Finance Act that deals with validation of demand and states that refunds shall be made only on the fulfilment of specific conditions.
- The Finance Act of 2012 attracted widespread criticism especially from the international and foreign investors on the ground that it was against the principle of tax certainty.
- It is expected from the new Bill to recover from the problems of the previous Act and it is expected that foreign investment will increase in India.
Tell us what you think of the Taxation Laws Amendment Reforms Bill.