Retro-tax laws: Shome panel submits final report to govt

New Delhi: The government-appointed panel on taxation of indirect transfer of assets submitted its report to Finance Minister P Chidambaram.

The submission of final report assumes significance, as Chidambaram had said British telecom giant Vodafone's tax matter would be decided after considering all aspects including recommendations of the Shome Committee on indirect transfer of assets.

The expert committee on retrospective amendments headed by Parthasarathi Shome "emailed" the final report to Chidambaram, a senior official said.

While contents of the report were not immediately known, the draft which was made public earlier this month had favoured prospective application of tax law and waiver of interest and penalty in case of retrospective application.

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The Income Tax Department on 22 October, 2010 passed an order determining a tax liability (including interest) of Rs 11,218 crore on Vodafone on acquisition of Hutchinson's stake in Hutch-Essar through a deal in Cayman Islands in 2007.

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The Supreme Court, however, quashed the order in January this year.

The then Finance Minister Pranab Mukherjee had sought to undo the Supreme Court judgement in the tax case, which went in favour of Vodafone, by making changes in the IT Act with retrospective effect.

The committee had submitted its draft report on indirect transfer in October and had invited comments and suggestions by 19th of the month.

The Finance Ministry had said the views of the government on the recommendations of the Expert Committee will be formed after receipt of the final report.

The Shome panel is also looking into the issue of controversial General Anti Avoidance Rules (GAAR) and has submitted a draft report in September.

The Standing Committee on Finance had found the investment climate in the country suffered a serious setback and investor confidence was hit mainly due to concerns over the impact of retrospective tax laws and GAAR.

PTI