It’s a major development, the IT Amendments nullifies the ghost of the retro tax. What prompted such a move?
Tarun Bajaj: Let me take you back to the speech of late FM Arun Jaitley in the Lok Sabha in July 2014, where he said that the government was against the retrospective amendments and taxation laws. I think it is that commitment that we have been able to put up before the parliament and now it is for the parliament to take a decision on this. And the late FM also said that there were certain legacy cases that were going on and they should reach a logical conclusion. We have been receiving a lot of FDI in the last year in spite of COVID, but there was this very sore point with all the investors.
Investors were cautious of coming into india and this decision does help us to actually clarify on that provision to the investor community that we are not into any retrospective legislations and especially of this kind.
Will it put to rest some of the legacy tax issues like Cairn & Vodafone? Is it because govt lost out to Cairn & Vodafone at international arbitration court?
Tarun Bajaj: On the legacy issues, yes, it will put an end to some of the legacy tax disputes and bring tax certainty. The companies have to be compliant with the condition that would be set forth, and if all the litigations are over, we would be able to settle those cases also.
For a sovereign which has a budget of more than Rs 30 lakh crores, an amount of 5000-10,000 cr is not that important. What is important is your commitment, what is important your word. What is important that
you will not go back on the legislation that you have and give that confidence to investors
You’re saying the settlement is subject to withdrawal of cases?
Tarun Bajaj: Yes, The companies will have to withdraw the cases. There will be an undertaking and certain other conditions that will be laid down in the rules that they will have to comply with before the actual settlement of the amount does take place. So, basically it would involve all the litigations to be closed, and some kind of an undertaking that discloses all matters, and only the principal amount will be refunded.