CBDT to forego interest, if principal is paid
What's the story
Central Board of Direct Taxes (CBDT) now only wants the companies to pay up the principal demand of capital gains tax. The interest payable on the principal demand will be written off if the tax liability was due to retrospective amendment to the law or a court ruling. It is an extension of Direct Tax Dispute Resolution Scheme that was introduced last year.
Background
Prior deal given to firms by Jaitley
Jaitley had said government would write off interest and penalty if firms pay principal tax amounts. To avail this deal, the firms would also need to take back all the cases filed on government's move to carry a back-dated amendment. The government had made a retrospective amendment to the Income-Tax (I-T) Act, 1961 applicable to all deals made after from the assessment year 1962-63.
Introduction
Vodafone: dues first, merger later
Vodafone currently owes the government Rs. 14,200 crore tax due the $11 billion it had paid to acquire Hutchison Whampoa's stake in 2007. After the Idea and Vodafone merger it is expected that the government may push Vodafone to clear its dues before giving approvals. But Vodafone authorities said that this merger will not be affected by it.
Journey
Cairn Energy plc, the big fish in the net
The firm owes the government a staggering sum of Rs. 29,000 crore in tax demand due the capital gains made by it, when it listed and transferred all Indian business to Cairn India. ITAT had settled the case the firm put up questioning the retro amendment saying it has to pay the capital gains tax principal of Rs. 10,247 crore but not the interest.
Journey
'Genuine investments' in start-ups always welcome
The 2017-18 budget had proposed 10% long-term capital gains tax on shares of unlisted companies. Foreign Investors were sceptical about investing in start-ups in the fear of having to pay long-term capital gains tax on the share transfer. The government has promised that as long as the investments come from proper FDI channels, exemptions are going to be made.
Judgement
CBDT cracking the whip on evasion
CBDT has directed its officials to buckle up and to focus on recovering arrears and pending tax demand. CBDT Chief recently said that any shell company evading taxes, will be removed from corporate Affairs website and will be given notice. Field officers have now been asked by the Chief to file prosecution cases against those who show project falsified long-term capital gains.
Revenues
Tax evasion raises burden on the honest
Jaitley in his budget-speech mentioned that out of the 13.94 lakh companies registered only 5.97 lakh companies have filed returns. Out of the 5.97 lakh companies who have filed, 2.76 lakh companies have shown losses or zero income. Jaitley remarked that, "over decades tax evasion had become a way of life. When too many evade tax, the burden falls on those who are honest."