Taken Note Of Retrospective Tax Changes Proposed By India, Says Cairn Energy
Cairn Energy Plc, embroiled in a tax dispute with the Indian government, said it has taken note of the Taxation Laws (Amendment) Bill 2021 introduced in Indian Parliament proposing certain changes to retrospective taxation measures.
"We are monitoring the situation and will provide a further update in due course," the company said in a statement on its website on Thursday.
The Finance Ministry has introduced the bill to amend the income tax law and reverse the impact of the tax on indirect transfers that was levied in 2012 with retrospective effect from 1961. The tax will only be levied prospectively, the bill proposes, on transactions after May 28, 2012. Any demands raised on pre-2012 transactions will be nullified, subject to certain conditions.
The 2012 change in the tax law had led to income tax demands raised in seventeen cases, according to the bill document. It mentioned no names.
In case of Cairn Energy, against a tax claim of Rs 10,247 crore (Rs 22,000 crore, if interest and penalty is included), the Indian tax department had recovered Rs 7,600 crore ($1.2 billion) via sale of assets seized from Cairn and withheld tax refunds. The international tribunal ruled against the tax claim and directed that $1.2-billion be returned to Cairn along with interest and costs. This added up to $1.7 billion at the end of 2021 fiscal.
Cairn has sought to enforce the international arbitral awards and even moved international courts to take over Indian government assets abroad in lieu of damages it won.