Govt Notifies Rules For Settling Retrospective Taxation Disputes, Seeks Indemnity Against Future Claims
The Union Finance Ministry has notified the rules for implementing the changes made to the Income Tax laws, which now officially repeal retrospective tax more than nine years after they came into effect.
The new rules provide that no tax demand will be raised in future on the basis of the amendment to section 9 of the Income-tax Act for any offshore indirect transfer of Indian assets if the transaction was undertaken before 28 May 2012.
As per the notification, any company like Cairn Energy, Vodafone and others looking to settle pending retrospective tax disputes will have to indemnify the Indian government against any future claims arising out of the said dispute.
The firms will have to give an undertaking that they will withdraw any pending litigation or proceeding before any forum.
They will also have to subsequently assure that they would not be pursuing any such claims in the future.
The gazette notification said that the company will have to furnish the indemnity bond with the income tax authority and its resolution panel.
The firms will subsequently receive a time period of 30-60 days to settle their claims.
However, it is reiterated in the notification that the companies will have to irrevocably withdraw, discontinue and not pursue any lawsuits, arbitration, mediation or conciliation either within the country or abroad.
“The declarant and all the interested parties shall refrain from facilitating, procuring, encouraging or otherwise assisting any person (including, but not limited to any related party or interested party) from bringing any proceeding or claims of any kind related to any relevant order or orders, or in relation to any award, order, judgment, or any other relief against the government or Indian affiliates in connection with any relevant order or orders,” the notification reads, reports Moneycontrol.
Any interested company can kick off the process of submitting the undertaking within 45 days effective 1 October and the tax authorities will subsequently have 15 days to pass an order.
Upon the fulfillment of these conditions, the government will refund the tax amount paid by the companies without interest and penalty.
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