NEW DELHI: The Lok Sabha on Friday passed the Taxation Laws (Amendment) Bill, 2021, that aims to nullify the relevant retrospective tax clauses introduced in 2012 to bring past indirect transfer of Indian assets under the ambit of taxation, within minutes amid opposition protests on issues like Pegasus snooping controversy and the three central farm laws.
The House also passed the Central Universities (Amendment) Bill, 2021, before Rajendra Agarwal, who was in the Chair, adjourned the House till Monday.
Earlier, Union Finance Minister Nirmala Sitharaman, while providing the background of the Bill and of retrospective taxation in the country, invoked late Union finance minister Arun Jaitley, to say that the Bill was a promise fulfilled by the Narendra Modi government.
The legislation seeks to nullify the effect of the amendment brought by the Finance Act, 2012, to impose tax liability on gains arising from indirect transfer of Indian assets with retrospective effect.
The amendment had attracted widespread criticism, especially from international quarters, on the grounds that the retrospective effect militates against the principle of tax certainty.
The contentious retrospective tax law of 2012 was used to raise large tax demands on foreign investors like Vodafone and Cairn Energy.
The statement of objects and reasons of the bill said the retrospective amendment “continues to be a sore point with potential investors”.
The 2012 amendment was passed to overturn the Supreme Court verdict in the Vodafone case which held that gains arising from indirect transfer of Indian assets are not taxable under the then existing provisions of the Income Tax Act, 1961.
The provisions of the Income Tax Act, 1961, were amended with retrospective effect.