FM justifies change is tax laws

Finance Minister Pranab Mukherjee today justified legislative changes in taxation law with retrospective effect, saying this was required in order to protect “the interests of the (tax) department”.

“Sometimes, retrospective effect is to be made in order to protect the interests of the department. Otherwise, instead of collecting taxes, we shall have to refund the amount due from them,” the minister said during debate on the Finance Bill in the Rajya Sabha. He said the government would look into these legal aspects.

The Finance Bill often gives clarifications on tax proposals which have retrospective effect. For instance, Finance Bill 2010 added an explanation to the definition of “commercial training or coaching service” with retrospective effect from July 1, 2003. This brought all such institutions, non-profit or otherwise, into the ambit of service tax if they were rendering service for a consideration.