New Delhi : A new Bill has been introduced in Parliament which proposes to amend the Income Tax Act to settle the controversial issue of taxability of gains arising from transfer of assets located in India through transfer of the shares of foreign company (indirect transfer of Indian assets).
A pandora’s box was opened in May 2012 when an amendment was made in the Income Tax Act to tax such indirect transfer of Indian Assets, with retrospective effect. This amendment had tainted India’s image as an investment destination, Mr Mukul Bagla, Chair, Direct Tax Committee, PHDCCI, said in a statement here.
The Union Finance Minister Nirmala Sitharaman had introduced
“The Taxation Laws (Amendment) Bill” in the Lok Sabha on August 5.
The Bill proposes to amend the Income Tax Act 1961 so as to provide that no tax demand would be raised in future on the basis of the said restrospective amendment for any indirect transfer of Indian assets if the transaction was undertaken before May 28, 2012, I.e the date on which the Finance Bill 2012 received the assent of the President.
The newly introduced Bill will not only end prolonged litigation in numerous cases but will also uplift India’s image internationally.
However, it is felt that if such an amendment was made immediately after India lost the arbitration award, Indian Government’s intention to be fair in all taxation matters would have been appreciated much more globally, Bagla’s statement added.
However, better later than never, this new bill shall improve India’s reputation substantially as a fair and equitable taxing nation, the PHDCCI Direct Tax Committee head said in the statement.
