On Thursday, the government introduced a Bill in the Lok Sabha seeking to withdraw tax demands made using a controversial 2012 retrospective legislation to tax the indirect transfer of Indian assets and apply it prospectively.
Bajaj said the government does not believe in retrospective amendments and the provision was being undone. “This was the sore point with the investor community,” Bajaj said, adding that a host of companies were at the cusp of deciding their investments and this will spur their decision.
The bold step, Bajaj said, sends out a strong message to overseas investors.
Investors have frequently raised the retrospective taxation issue.
At an investor meet in the US on April 18, 2015, a participant had asked former finance minister, the late Arun Jaitley: “What would you say to an investor who says, ‘I can trust you, Mr Jaitley, I can trust this government, but as long as that law remains on the books, how can I be sure that in seven years, or in eight years, or in 10 years, or 12, it is not misused by another government that does not share your intentions?”
The government was thinking of ways to address the problem — without compromising the sovereign’s right to tax — after it lost the high-profile Vodafone and
cases in international arbitration, though it has appealed both the verdicts.
Bajaj said since this was being done under the country’s legal framework and not under arbitration, it established India’s sovereign right to tax.
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