‘Retro tax’ rule: final decision likely on 15 November

The government is likely to take a final view on the Shome panel report on taxing overseas transactions involving Indian assets on 15 November, a finance ministry official said on Tuesday.

"The finance ministry will take final view on retrospective amendment to tax laws by 15 November and may come up with appropriate amendments to the Income Tax Act in the winter Session of parliament," the official said, according to The Economic Times.

The Parthasarathi Shome committee in its draft report has suggested that ideally retrospective taxes should not be applied to transactions such as the Vodafone-Hutchinson deal, and any provisions on such transactions should be prospective.

If however the government insists on charging taxes retrospectively, it should not claim either interest or penalty, the draft report panel said.

The committee is expected to submit its final report by month-end after receiving comments from stakeholders, the official said.

If accepted, these proposals will provide relief to companies like Vodafone which are facing tax liability on account of overseas mergers and acquisitions involving domestic assets.