New rules to clear retro tax mess

Subject – Economy

Context – Govt. notifies new rules to clear retro tax mess

Concept –

Firms such as Cairn and Vodafone disputing retrospective tax demands in India will not only have to withdraw all legal proceedings and waive all rights to claim costs or attach Indian assets but also indemnify the government on costs and liabilities from any action pursued by other interested parties in future.
Setting the stage for a closure of the retrospective tax disputes over indirect transfer of assets situated in India, the Union government late on October 1 notified new rules under the Income Tax Act for specifying the process to be followed by affected taxpayers to settle these long-brewing disputes.
The Income-Tax (31st Amendment) Rules, 2021, introduce a new portion pertaining to ‘indirect transfer prior to May 28, 2012 of assets situated in India’, and lay out the conditions and formats for undertakings to be submitted by all ‘interested parties’ to the tax department in order to settle their tax disputes.