Ending retro tax to boost $5-trn economy dream: FM Nirmala Sitharaman

Rajya Sabha returns Bill to Lok Sabha amid Opposition protests

The Finance Ministry on Monday said a Bill to end retrospective taxes imposed on indirect transfer of Indian assets will encourage companies to invest in India and help the country become a $5-trillion economy.

The Rajya Sabha on Monday returned the Taxation Laws (Amendment) Bill, 2021 to the Lok Sabha after main opposition parties staged a walkout. Following this, only the President's assent is required to make it a law.

“(The Bill) will spur companies that are on the cusp of deciding their investments into investing in India. (It) will provide impetus to the country’s goal of becoming a $5-trillion economy,” Finance Minister Nirmala Sitharaman’s office tweeted.

The office said the legislation will instil confidence on the Indian economy among foreign and domestic investors. 

“It (will) avoid unnecessary litigation and save time and costs of the government,” the ministry said on the microblogging site.

The Bill will boost the policy of the government to have a predictable tax regime. Replying to the debate in the Upper House, Sitharaman said, “This (Bill) is appealing enough and will put an end to this ghost which we have been carrying all this while since 2012… I seek support of the House to make India look very clear, transparent and fair taxation land.”

The Congress, the TMC, the DMK walked out of the House before the Bill was taken up for discussion. The minister also told the House that the Bill provides for no payment of interest on refund made under this and the parties seeking relief would not pursue further appeals or litigation in these cases.

The Bill proposes to amend the Income Tax Act, 1961 so as to provide that no tax demand would be raised in future on the basis of the said retrospective amendment for any indirect transfer of Indian assets if the transaction was undertaken before May 28, 2012, the date on which the Finance Bill, 2012, received the President’s assent.