India withdraws retrospective amendment to tax indirect transfers, big relief for many multinationals

The Indian government on August 4 introduced a new regulation to withdraw an amendment that was made under domestic tax laws in 2012, with retrospective effect from 1961, whereby the indirect transfer of assets located in India and owned by non-residents was taxed.

All tax demands raised in relation to the indirect transfer of Indian assets that happened before 28 May 2012 shall now be nullified in ongoing revenue audit proceedings, and all pending proceedings shall be deemed to be concluded without any additions. Refunds shall also be granted in cases where taxes have already been paid by the taxpayers.

Taxpayers have been given an option to withdraw ongoing appeal, arbitration, conciliation or mediation by filing an application before the relevant authorities. Taxpayers must waive their right to claim costs, damages, interest, etc., by way of a declaration.    

The new regulation has come as a major relief and is a welcome step for multinational enterprises like Vodafone and Cairn, which were caught in tussles with Indian tax authorities over indirect transfer taxes arising out of the retrospective amendment. Few multinational enterprises had successfully challenged the retrospective amendments in international courts.

Currently, tax demands in 17 cases have been pending with the Indian government which shall now get settled. The Indian government seeks to provide tax certainty to investors and enhance India’s reputation as an attractive investment destination.

 

https://mnetax.com/india-withdraws-retrospective-amendment-to-tax-indirect-transfers-big-relief-for-many-multinationals-45393

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