President gives his Assent to New Law to Bury Retrospective Taxation

President Ram Nath Kovind gave his assent on August 13, 2021 to a Bill to bury retrospective taxation. With this, the Taxation Laws (Amendment) Bill has become an Act now. Meanwhile, Bills for amending Deposit Insurance and Credit Guarantee Act and Limited Liability Partnership Act, and Bill for Tribunal Reforms has also become Acts.

The Taxation Laws (Amendment) Act amends Income Tax Act 1961 and Finance Act 2012. It prescribes that tax demands raised on the basis of the 2012 retrospective amendment for any indirect transfer of Indian assets, if the transaction was undertaken before May 28, 2012, shall be “deemed never to have been passed or made”. It was on May 28, 2012 when the Finance Bill, 2012 received the President’s assent. The latest Act also envisages that no tax demand will be raised in the future for transactions made before May 28, 2012.

The Act also says demand already raised will be ‘nullified’, but with conditions such as the companies concerned will have to withdraw all legal suits. Once they submit the declaration, the government will refund the amount paid without any interest thereon. Now, the government will come out with detailed rules and framework to operationalize the law.

Other New Acts

An Act to amend Deposit Insurance & Credit Guarantee Law (1961) will enable depositors to access their deposit up to the sum prescribed under deposit insurance (₹5 lakh) even if the bank is placed under moratorium. Depositors of PMC Bank will also to be covered under the new mechanism. As of now, depositors have to wait for liquidation or the passage of resolution to get the benefit of deposit insurance. This takes up to 8-10 years. With the implementation of the act, payment is to be made within 90 days.

The Limited Liability Partnership (Amendment) Act aims to carry out amendments to the Limited Liability Partnership Act (2008) to decriminalize 12 compoundable offences which deal with procedural and technical violations.

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