The center will repeal the controversial retrospective tax law, with cabinet approval

New Delhi, Dt

The central government has decided to repeal the controversial retrospective tax law. Companies like Kern and Vodafone have filed lawsuits against the government over the retrospective tax law of 2013. The cabinet on Thursday approved a bill to repeal the controversial 2017 law. Not only this, the Central Government is also ready to refund the amount paid by the companies under this Act to the concerned companies without interest. India lost the case against Vodafone and British company Kern Energy in connection with the implementation of the law.

Union Finance Minister Nirmala Sitaram introduced a bill in the Lok Sabha on Thursday to repeal the retrospective law. The bill has previously been approved by the Cabinet. Under the new proposed bill, the retrospective law will not be applicable to any indirect transactions of Indian assets before May 2016. However, the government has imposed some conditions for this. The new bill is likely to put an end to the central government's legal disputes with Vodafone and Kern Energy.

On the introduction of a new bill to remove the retrospective tax law, Revenue Secretary Tarun Bajaj said the Taxation Law Amendment Bill was an important step towards making India a better place to invest. After the passage of this new bill in Parliament regarding non-imposition of retrospective tax, it will help us in resolving 14 tax disputes related to the tax department. Of these, an estimated Rs 5,000 crore has been raised so far in four tax disputes. After the passage of this bill, the total financial liability of the Government of India will be approximately Rs 5,000 crore.

In September last year, an international arbitration authority in The Hague ruled that India's tax liability on Vodafone, as well as interest and penalties, violated the investment treaty agreement between India and the Netherlands. The proposed law also shows that the Central Government is ready to repay the amount paid under the Retrospective Act of May 2018 without any interest. Companies like Kern and Vodafone had filed cases in international courts due to retrospective tax collection and the Indian government had lost all the cases.

In both the Kern and Vodafone cases, the International Arbitration Authority in the Netherlands said India should make no further effort to recover the alleged tax liability or any interest or penalty. The Indian government lost the case against Vodafone in an international arbitration arbitration in the Netherlands last September.

In 2008, the central government transferred Rs. 11,000 crore in taxes. The company opposed it and the case was taken to court. The tribunal ruled that imposing interest and penalties on Vodafone, along with tax liability, violated an investment treaty agreement between India and the Netherlands.