New Delhi: In a major development, the Central government on Thursday proposed to scrap the retroactive tax law that had led to lawsuits by firms like Cairn and Vodafone. The move came after the Union Cabinet earlier in the day cleared a bill to scrap the controversial law of 2012. Moreover, the Centre said that it is ready to refund the amount paid without any interest.Also Read - Jio vs Airtel vs Vi: Who Is Providing Better Plan At Rs 199?

It must be noted that India had lost the case against Vodafone and in December last year, filed an appeal. And in September, The Hague had ruled that India’s imposition of tax liability on Vodafone, as well as interest and penalties, breached an investment treaty agreement between India and the Netherlands. Also Read - Buying Home For First Time? Here’s How You Can Avail Income Tax Benefits | Details Here

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As per the updates, the amendment to the Income-Tax Act, 1961, which received the President’s assent in May 2012, allowed the government to ask companies to pay taxes on mergers and acquisitions that happened before that date.

Widely contested in the courts, the controversial hounded Vodafone for years over its acquisition of Hutchison’s India telecom stake.

“The Bill proposes to amend the Income-tax Act, 1961 so as to provide that no tax demand shall 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 28th May, 2012 (i.e., the date on which the Finance Bill, 2012 received the assent of the President). It is further proposed to provide that the demand raised for indirect transfer of Indian assets made before 28th May, 2012 shall be nullified on fulfilment of specified conditions such as withdrawal or furnishing of undertaking for withdrawal of pending litigation and furnishing of an undertaking to the effect that no claim for cost, damages, interest, etc., shall be filed,” the government said.

The Centre said a new bill will undo the tax and added that Cairn, Vodafone and other companies could get a refund of whatever they have paid to the government, without interest.

It should be noted that Cairn and Vodafone had filed lawsuits in international courts against the retrospective tax, both of which India lost.