Final view on retro tax amendments by Nov 15: FinMin | Firstpost

The government is likely to take a final view by November 15 on the Shome panel report, which had favoured prospective application of tax laws in its report on retrospective amendments relating to taxation of indirect transfers, a Finance Ministry official said.

?The Finance Ministry will take final view on retrospective amendment to tax laws by November 15 and may
come up with appropriate amendments to the Income Tax Act in the Winter Session of Parliament,? the official said.

Moneycontrol.com

The Parthasarathi Shome committee in its draft report had suggested prospective application of tax law and waiver of interest and penalty in case of retrospective application.

If accepted, these proposals will provide relief to companies like Vodafone which are facing tax liability on account of overseas mergers and acquisitions involving domestic assets.

The committee, the official said, is expected to submit its final report by month-end after receiving comments from stakeholders. The ministry, he added, would firm up its views on the issue by November 15.

The draft report had said that retrospective amendments carried out through Finance Act, 2012 were ?not clarificatory in nature and, instead, would tend to widen the tax base ? these provisions, after introducing clear definitions ? should be applied prospectively.?

Prospective application of tax laws, the committee had argued, ?would better reflect the principles of equity and probity in the formulation and implementation of commonly recognised taxation principles?. It has also said that ?retrospective application of tax laws should occur in exceptional or rarest of rare cases?.

In case the government opts to apply the law retrospectively, the Committee had said it should waive interest and penalty. Shome later had also said that several countries refrain from changing tax laws with retrospective effect.

Finance Minister P Chidambaram had asked tax expert Shome to look into the retrospective amendment to tax laws which had evoked sharp reaction from the international business community. The then Finance Minister Pranab Mukherjee had sought to undo the Supreme Court judgement in the Rs 11,218-crore tax case which went in favour of Vodafone by making changes in the IT Act with retrospective effect.

The Income Tax Department had originally raised a demand of Rs 7,900 crore on Vodafone on its acquisition of Hutchinson?s stake in Hutch-Essar through a deal in Cayman Islands in 2007. Chidambaram had earlier said that he would like to settle all tax disputes both anticipated and pending.

PTI

Source: http://www.firstpost.com/economy/final-view-on-retro-tax-amendments-by-nov-15-finmin-486399.html

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