New Delhi, Oct 9: A government-appointed panel has said tax regulations regarding asset transfers should not apply retrospectively, potentially providing relief to British telecom firm Vodafone.
The panel, headed by Parthasarathi Shome, in its draft report, published Tuesday, also said the government should not levy any penalty interest in cases where tax demands have been raised following the amendment of tax rules retrospectively in March.
The expert committee on the controversial general anti-avoidance rules (GAAR) has recommended that the new tax regulation should be implemented prospectively.
The general anti-avoidance rules, introduced in the 2012-13 budget, give power to the authorities to tax transactions retrospectively. The GAAR was introduced amending certain provisions of the Income Tax act of 1961.
“Based on inputs received from various stakeholders and the Committee’s own analysis, the Committee is of the view that, as a matter of policy, government should best avoid introducing fundamental changes in tax provisions without consultations and thus not anticipated by the taxpayer,” the panel said in the draft report.
The retrospective tax measure introduced this year was seen as targeting Vodafone, after the government lost a legal battle to claim about $2 billion from the company related to its 2007 acquisition of Indian mobile phone assets.
Stakeholders and public comments on the draft report are invited til Oct 19.