Wednesday, June 29News That Matters

Lok Sabha passes law to nullify retrospective tax

Vibha Sharma

Tribune News Service

New Delhi, August 6

The Lok Sabha on Friday passed without any discussion the Taxation Laws (Amendment) Bill, 2021, that aims to nullify the relevant retrospective tax clauses introduced in 2012 to bring past indirect transfer of Indian assets under the ambit of taxation amid Opposition protests on the Pegasus snooping controversy and the three central farm laws.

“The Bill is being brought to keep up the word given by former Union finance minister Arun Jaitley under the leadership of Prime Minister Narendra Modi, keeping up the commitment of the BJP that we don’t believe in a retrospective collection of tax. We are keeping that word,” said Union Finance Minister Nirmala Sitharaman, while moving the legislation for consideration and passage amid the din.

The House also passed in a jiffy the Central Universities (Amendment) Bill, 2021, before Rajendra Agarwal, who was in the Chair, adjourned the House till Monday. The legislation seeks to amend the Central Universities Act, 2009, to provide for the establishment of a university in the union territory of Ladakh.

Speaking on the Bill, Dharmendra Pradhan called it a “historic occasion for the region”. The Centre had announced the establishment of the new university after the abrogation of Article 370 in Jammu and Kashmir, he said.

Earlier, Sitharaman, while providing the background of the Bill and of retrospective taxation in the country, invoked Jaitley to call it a promise fulfilled.

Sitharaman said that after coming into power in 2014, Jaitley “clearly made a commitment here in the House that we do not believe in applying the law in retrospect and we would certainly form a high-level committee which will look into all such cases”. She said that between 2014 and today, the high-level committee dealt with this matter and “we have not had one claim based on the amendment made in 2012”.

The FM said for the cases prior to 2012, for which it was retrospectively applied, there were 17 such cases. “Of these, two went to the court, which were stayed, and the claims could not be pursued further.

“As promised by Arun Jaitley, in principle we do not believe in this. However, we couldn’t act on this in 2014 because there were two cases going on,” she said.

According to Sitharaman, like Jaitley said the government waited for them to reach a logical conclusion which was arrived in September 2020 in one case and in December 2020 in another.

The cases were studied by the government, and consultations held with the Law Ministry. However, because the Budget session was contracted, the government could not take up many activities then, she said.

“We have come to the next available session, which is the monsoon session, which is now, to keep up the word given by Jaitley and keeping up the commitment of the BJP, that we don’t believe in a retrospective collection of tax. We are fulfilling that promise,” she said.

The amendment had attracted widespread criticism, especially from international quarters, on the grounds that the retrospective effect militates against the principle of tax certainty with some also calling it “a sore point with potential investors”.

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