CBDT says Centre will refund Rs 8000 cr to 4 cos including Vodafone under new taxation law

The Central Board of Direct Taxes (CBDT) on Monday said that the government will have to pay Rs 8000 crore to four companies once the Taxation Laws (Amendment) Bill, 2021 becomes law. The CBDT Chairperson JB Mohapatra, mentioned companies including Cairn Energy, Vodafone, WNS Capital and one more, that the government will be liable to pay by next week. Mohapatra was speaking after Taxation Laws (Amendment) Bill, 2021 was passed in Rajya Sabha.

The govt will have to start refunds soon

The new taxation bill was introduced to the Lok Sabha by finance minister Nirmala Sitharaman, on August 5. The minister had informed that the newly tabled bill would do away with the contentious retrospective tax after more than nine years since its introduction. The retro tax introduced as part of the Finance Act 2012, imposed a tax on capital gains by companies like Cairn Energy Plc and Vodafone group of UK. It would also end all retrospective taxes imposed on indirect transfer of Indian assets made before May 28, 2012.

In an interview with ANI, CBDT Chairperson said, "As far I know, there are four cases. Apart from Cairn Energy, three other cases are WNS capital, Vodafone and one more case. So, in total, in excess of Rs 8000 crores will be paid out by way of refund and the refund will be without any interest."

Further explaining the new taxation laws and their effects, Mohapatra said, "The statement of the finance minister says about 17 cases, in which four cases where demands have been paid as a part and those are the four cases where demands have been paid. There are other 13 cases where demands have been raised, but they have not yet been discovered. So It will be a simple refund to be given by the Income Tax department for the payments they have made, they will be refunded in terms of the amendment which has been brought through as and when it is passed, and given assent by the President and becomes law.”

CBDT Chairperson said that the government is now trying to end the litigation. “Bill is passed in Rajya Sabha. Now it will come back to the Lok Sabha for confirmation, after that it will go to the Ministry of Law and then it will be notified. We will have the new law by early next week. This has been one of the pain points for the department for a long time. In 2012, this bill came into the Act," Mohapatra said.

CBDT chairman confident on the new taxation laws

Mohapatra went on to say that the law was never bad. “It had its own history. Already, prospectively in tax law is not bad per se. There has always been this retrospectively," he said. The CBDT chief claimed that the rework was done for bettering it and denied any pressure in taking the amendment decision. He said that it took nine years to work on the amendment, which was necessary to build ‘confidence in tax law’. Backing the amendments, Mohapatra said that the government helped in making the right decisions in terms of the law.

"As far as I can recollect, there has been no opposition to the amendment which has been brought in. The only issue, which has been raised was for the timing of this amendment, but timing also had been perfect, because the government, all the way wanted the legal processes to run its course. The Government also realizes that time has come to set right and bring the investors confidence back for making an investment in India," Mohapatra added.

What is retrospective tax? What does its removal mean?

Earlier on May 28, 2012, the 2012 Finance Act was introduced, giving legal backing to the country's retrospective taxation. The retrospective tax law imposed a tax on companies' capital gains, causing a fallout with British firms like Cairn Energy Plc and Vodafone group. The bill was announced by the late Pranab Mukherjee during his tenure as the finance minister and was approved by then President Pratibha Patil. Now, the current government is planning to reverse this and do away with cases pending regarding the law in Indian courts. Many investors have already backed it as it supports the pleas of foreign investors.

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