The Income Tax Department has released draft rules that will help close tax demands against companies such as Vodafone Plc.
The rules provide details for companies to give an ‘irrevocable’ undertaking to withdraw all legal cases against the government as well as an undertaking to not pursue any in future.
Earlier in August 2021, the government had brought in The Taxation Laws (Amendment) Act 2021 which stated that no tax demand shall be raised for any indirect transfer of Indian assets if the transaction was undertaken before May 28, 2012. The amendment made by 2021 Act also provides that the demand raised for offshore indirect transfer of Indian assets made before 28th May, 2012 (including the validation of demand provided under Section 119 of the Finance Act 2012) shall be nullified on fulfillment 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 and such other conditions are fulfilled as may be prescribed, the tax department said in a statement.
That rule had been used to levy a cumulative of Rs 1.10 trillion of taxes on 17 entities, including Rs 102.47 billion on Cairn and Rs 221 billion on Vodafone.