UK India Business Council welcomes Government of India move to withdraw retrospective tax demands
The UKIBC applauds the Government of India upon the amendment to India’s retrospective tax law which will see any tax demand made on transactions that took place before May 2012 dropped, and any taxes already collected on such transactions to be repaid.
The move sends a welcome message to international investors and one that the UKIBC believe will help to attract foreign investment to India and which draws a line under historic Indian retrospective tax issues.
UKIBC Chair, Richard Heald, said: “We at UKIBC believe this is a hugely positive step in promoting India as a progressive business environment. The UKIBC has been engaging with the Government of India on this topic for a long time. Businesses need certainty when making investment decisions and to protect shareholders. The Taxation Laws (Amendment) Bill sends a clear message that India is truly open and welcoming to business.”
The Taxation Laws (Amendment) Bill, 2021 was introduced by Finance Minister Nirmala Sitharaman in the Lok Sabha on Thursday 5th August 2021. The Bill seeks to withdraw tax demands made using a 2012 retrospective legislation to tax the indirect transfer of Indian assets. The Bill will provide that no tax demand based on the retrospective amendment shall be raised in the future. It also asserts that any demand raised for indirect transfer of Indian assets before 28th May 2012 shall be nullified on fulfilment of specified conditions such as withdrawal of litigation and no claims for damages. India is also proposing to refund the amount paid in these cases without any interest thereon.
The Bill has been already approved by the Lower House of Parliament. UKIBC expects the Bill to be passed by the Upper House imminently and to receive Presidential Approval in the coming days.
With the negotiations towards a comprehensive Free Trade Agreement between India and the UK flagged to commence shortly, the passage of this legislation will represent a huge step to underpin the credibility of a successful and welcome outcome.
The UKIBC looks forward to continuing to support members, clients, and businesses to working constructively with the Government of India to improve India’s standing in the World Bank’s Ease of Doing Business rankings.