New Delhi: In order to soothe nerves of foreign investors, the government on Monday offered one-time settlement of cases emanating from retrospective amendment of tax laws, by asking companies to pay the basic tax demand and get waiver for interest and penalty.
To provide a stable and predictable taxation regime, Finance Minister Arun Jaitley in Budget 2016-17 came out with a 'Direct Tax Dispute Resolution Scheme' to resolve cases pending in any Court, Tribunal, Arbitration or mediation under the Bilateral Investment Protection Agreement (BIPA).
Experts said this is a big step towards tax reform and will act as a breather for companies like Vodafone and Cairn, which have been facing multi-billion dollar tax liability following retrospective tax amendments made in 2012.
"In order to give an opportunity to the past cases, which are ongoing under the retrospective amendment, I propose 'One Time' scheme of dispute resolution for them in which subject to their agreeing to withdraw any pending case lying in any Court or tribunal or any proceeding for arbitration, mediation, etc under BIPA, they can settle the case by paying only the tax arrears in which case liability of the interest and penalty shall be waived," Jaitley said in his Budget speech.
Jaitley on Monday also reiterated that the government will "provide a stable and predictable taxation regime. We will not resort to such (retrospective) amendments in future".
"I had also hoped then that the cases pending in various courts and other legal fora relating to certain retrospective amendments undertaken to the Income Tax Act, 1961, through the Finance Act 2012, will soon reach their logical conclusion. I would like to reiterate that we are committed to provide a stable and predictable taxation regime," he said.
The government had in 2014 Budget announced constitution of a high-level committee, which would oversee any fresh case where the Assessing Officer proposes to assess or reassess the income in respect of indirect transfers by applying the retrospective amendment.
"In order to allay any fears of tax adventurism, this committee will now be chaired by the Revenue secretary and consist of Chairman CBDT and an expert from outside. This committee will effectively oversee the implementation of the assurances," Jaitley added.