Why is retrospective tax scrapped?

Explained | Why is retrospective tax being scrapped? In January 2012, India’s Supreme Court backed Vodafone, ruling that indirect transfer of shares to a non-Indian company would not attract tax in India. In 2014, the Income Tax Department froze Cairn’s remaining shares in Cairn India.

What is the retrospective tax in India?

Retrospective tax is nothing but a combination of two words “retrospective” and “tax” where “retrospective” means taking effect from a date in the past and “tax” refers to a new or additional levy of tax on a specified transaction.

What is retrospective taxation when was it introduced in India?

The retrospective tax law, brought in via an amendment to the Income Tax law, was implemented after the Supreme Court, in January 2012, ruled in favour of Vodafone Plc in a case relating to its acquisition of Hutchison’s India assets in 2007 through a web of intermediate companies.

Who introduced retrospective tax in India?

Retrospective tax regime in India The trigger to introduce the retrospective taxation in India was the Vodafone-Hutchison deal in 2007. In May 2007, Vodafone had bought a 67 percent stake in Hutchison. The government raised a tax demand of Rs 7,990 crore in capital gains and withholding tax.

What is retrospective tax in India UPSC?

Retrospective Taxation It allows a country to pass a rule on taxing certain products, items or services and deals and charge companies from a time behind the date on which the law is passed. Retrospective taxation hurts companies that had knowingly or unknowingly interpreted the tax rules differently.

What is retro tax mess?

It relates to thinking about the past, ‘looking back over the past’, etc. In terms of taxation, retrospective tax means giving effect to the amendment in the present law before the date on which the changes were brought in.

Is GST applicable retrospectively?

This retrospective levy means that an RWA will have to charge GST retrospectively from 1.7. The purpose here is to disseminate knowledge and also point out the shortcomings of the government in this regard that any retrospective levy is retrogressive and hence should not be levied.

What is Vodafone retrospective tax?

The case pertains to the Rs 24,500-crore tax demand (including interest and penalty) on capital gains made by the oil major in reorganising its India business in 2006-07. The Income-tax department had launched retrospective tax investigation transactions undertaken prior to that in 2014.

What is retro tax amendment?

Retrospective tax is a tax levied on a deal or transaction which was conducted in the past. The amendment introduced in 2012 in the Finance Act enabled the government to impose retrospective taxes on transactions conducted after 1962 involving shares transfer in a foreign equity which owned assets in India.

What is Vodafone tax India?

In Vodafone’s case, the government will refund ₹44.7 crore since the company had not paid any tax on the demand raised by tax authorities, which comes to ₹22,100 crore in taxes, interest and penalties. Vodafone has filed the application under a separate set of provisions.

Is the law retrospective?

Retrospective legislation at common law “The general rule, applicable in most modern legal systems, is that legislative changes apply prospectively. Under English law, for example, unless a contrary intention appears, an enactment is presumed not to be intended to have retrospective effect.

Is retrospective taxation legal?

The Taxation Laws (Amendment) Act, 2021, received the assent of the President on August 13, scrapping the retrospective taxation clause in income tax law.