Modi government wants to end the controversial retrospective tax law, know why
About 9 years ago, Pranab Mukherjee, the former Finance Minister who later became the President of the country, had passed such a law, on which there was a lot of controversy. The Modi government is going to end it after the completion of 7 years of its tenure. The name of this law is the retrospective tax law. For which the Taxation Laws (Amendment) Bill, 2021 has been placed in front of the Parliament on Thursday by the government.
This law was made in 2012. After which the government got the right to levy tax from an earlier date. The then Finance Minister, Pranab Mukherjee, by amending the Finance Act, empowered the Income Tax Department with retrospective tax. At that time the Finance Minister had argued about this law that the court had given such suggestions on many occasions. He also referred to several decisions of the Supreme Court. In which it was said that the government should find a solution for this. There should be clarity about the responsibility and honors of the investors. The government can do this only by making amendments.
There was a lot of controversy about this law: There was a lot of controversy about this law and India’s image was dealt a big blow to attract foreign investment. Questions were raised about this law from many experts. In fact, retrospective taxation is such a process, from the date before which the tax becomes applicable. This type of tax is levied by the Income Tax Department to the companies. Under this law, the central government sent a tax demand to the British company Cairn Energy and Vodafone.
Challenge given in court: The tax demand of the Government of India on behalf of both the companies was challenged in the court. After which both the companies got relief from this tax after a long legal battle. International Arbitration ruled in favor of the companies. Cairn has filed cases in many countries of the world to implement the decision of International Arbitration. This is the reason why this government now wants to get rid of this law.
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