The committee recommendations have addressed the concerns of foreign investors to a large extent. If accepted, it wouldreduce uncertainty on the taxability of indirect transfers. Ruling in favour of Vodafone in January 2012, the Supreme Court had discharged the telecom major from withholding obligations in respect of its $11.2 billion deal with Hutchison Whampoa in 2007. Subsequently, Finance Act 2012 introduced retrospective amendments in the income-tax law to overcome the Supreme Court verdict in the Vodafone case. The Committee on General Anti-Avoidance Rule (GAAR), headed by Parthasarathi Shome, unveiled the draft report on indirect transfer on KEY RECOMMENDATIONSThe committee recommended that retrospective provisions for taxation of indirect transfer are not clarificatory in nature, and an amendment intended merely to widen the tax base is against the basic tenets of law. Accordingly, it recommended applying the amendments prospectively.
Source : The Hindu Businessline
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