British oil major Cairn Energy PLC, which is locked in a legal tussle with India over the retrospective taxation policy, has taken cognisance of the legislation tabled by the government on August 5 to undo the 2012 retro tax law.
In its initial reaction, Cairn Energy said it is monitoring the situation and would provide a further update according to the developments.
"We have noted the introduction to the Indian parliament of the Taxation Laws (Amendment) Bill 2021, which proposes certain amendments to the retrospective taxation measures that were introduced by the Finance Act 2012. We are monitoring the situation and will provide a further update in due course," said a statement issued by the company.
Earlier in the day, the Bill was introduced in the Lok Sabha after being cleared by the Union Cabinet.
Finance Minister Nirmala Sitharaman, in a written statement issued along with the legislation, said, "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."
May 28, 2012, was the date when the 2012 Finance Act, which gave legal backing to retrospective taxation, was assented to by then President Pratibha Patil, after being announced by then Finance Minister, the late Pranab Mukherjee.
Finance Secretary TV Somanathan, while speaking to CNBC TV 18, said the Bill would pave the way for a "fair solution" of the dispute between the Centre and the companies who have objected against the retrospective taxation policy.
The amount collected under the soon-to-be scrapped provision of the law would be refunded without interest, he said.
Somanathan noted that "approximately Rs 8,100 crore was collected so far" in form of retrospective tax, "which includes over Rs 7,000 crore collected from Cairn UK".
Notably, the international arbitration tribunal in The Netherlands had, in December last year, ruled in Cairn's favour in its lawsuit seeking return of $1.2 billion along with interest from India. The government had not accepted the tribunal's verdict, stating that it had never agreed to arbitrate the tax dispute.