CBDT notifies Final Rules on ‘No Retrospective Taxation’ of ‘Indirect Transfer’

CBDT notifies the Income Tax (31st Amendment) Rules 2021, i.e. final Rules on ‘no retrospective taxation’ in line with the Amendments made by the Taxation Laws (Amendment) Act, 2021. Accordingly, new IT Rules 11UE and 11UF have been inserted for provisions relating to Indirect transfer prior to 28/05/2012 of assets situate in India’ along with Form 1/ 2/ 3.

New IT Rule 11UE provides for the specified eligibility conditions for claiming relief/ refund and Rule 11UF prescribes the form and manner of furnishing undertaking for withdrawal of pending litigation, claiming no cost, damages, etc.

It may be noted that amendments were made in the Income Tax law by the Taxation Laws (Amendment) Act, 2021, to ensure:-

i) that no tax demand is raised in future on the basis of the amendment to section 9 of the Income-tax Act made vide Finance Act, 2012, for any offshore indirect transfer of Indian assets if the transaction was undertaken before 28/05/2012 (i.e., the date on which the Finance Bill, 2012 received the assent of the President);

ii) that the demand raised for offshore indirect transfer of Indian assets made before 28/05/2012 (including the validation of demand provided under Section 119 of the Finance Act 2012) shall be nullified on fulfillment of specified conditions such as withdrawal or furnishing of undertaking for withdrawal of pending litigation and furnishing of an undertaking to the effect that no claim for cost, damages, interest, etc. shall be filed and such other conditions are fulfilled as may be prescribed;

iii) that the amount paid/ collected in these cases shall be refunded, without any interest, on fulfillment of the said conditions;

iv) that pending Income-tax proceedings shall be withdrawn, demand, if any, raised shall be nullified, and amount, if any, collected shall be refunded to the taxpayer without any interest, to bring tax certainty.

Further, CBDT has subsequently notified the ‘Relaxation of Validation (Section 119 of the Finance Act, 2012) Rules, 2021’, to prescribe the forms, manner and conditions for filing of the undertaking/ declaration for settlement of the retrospective taxation cases under revised IT Rules, as under:

CBDT Income Tax Notification 120/2021 dt. 13/10/2021: CBDT notifies the prescribed forms, manner and conditions for filing of undertaking for settlement of retrospective tax cases

CBDT Press Release dt. 02/10/2021: CBDT notifies final Rules ‘no retrospective taxation’, i.e. for implementing the amendments made by the Taxation Laws (Amendment) Act, 2021

CBDT Income Tax Notification 118/2021 dt. 01/10/2021: Final Income Tax Rules on ‘No Retrospective Taxation’ of ‘Indirect Transfer’ notified for implementing the amendments made by the Taxation Laws(Amendment) Act, 2021

CBDT Press Release dt. 28/08/2021: Framing of rules for the amendments made by the Taxation Laws (Amendment) Act, 2021

CBDT Income Tax Draft Notification dt. 28/08/2021 on Rules for implementing the amendments made by the Taxation Laws (Amendment) Act, 2021; comments/ suggestions invited by 04/09/2021

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