'Glad we have put an end to retrospective tax issue'

Glad we have put an end to 8-year-long retrospective tax issue: Chidambaram

'The Taxation Laws (Amendment) Bill, 2021' was passed by the Lok Sabha Friday

Senior Congress leader P Chidambaram. Credit: PTI File Photo

With Lok Sabha passing a bill that aims to end all retrospective taxation, senior Congress leader and former finance minister P Chidambaram Friday said he is glad that an issue that had been troubling India for eight years has been put to an end.

'The Taxation Laws (Amendment) Bill, 2021' was passed by the Lok Sabha Friday. 

When it is also passed by Rajya Sabha, all tax demands made on companies like Cairn Energy and Vodafone using a 2012 legislation on indirect transfer of Indian assets prior to May 28, 2012 will be withdrawn.

Also Read | Lok Sabha passes bill to end all retrospective taxation

"On the withdrawal of the Retrospective Tax (Vodafone), I am glad that we have put an end to an issue that has been troubling us for 8 years," Chidambaram said in a tweet.

The Finance Act 2012, which amended various provisions of the Income Tax Act, 1961 with retrospective effect, contained provisions intended to tax any gain on transfer of shares in a non-Indian company, which derives substantial value from underlying Indian assets, such as Vodafone's transaction with Hutchison in 2007 or the internal reorganisation of the India business that Cairn Energy did in 2006-07 before listing it on local bourses.

Besides creating uncertainty in the minds of investors, the retrospective taxes have in recent months been overturned by international arbitration tribunals in two high profile cases -- UK telecom giant Vodafone Group and oil producer Cairn Energy.