The Government of India has finally passed a bill to withdraw
the retrospective nature of the Indirect Transfer tax amendment.
The provision was introduced after the Hon'ble Supreme
Court's verdict in the case of Vodafone. It was held that gains
arising from indirect transfer of Indian assets in respect of
transaction between Vodafone and Hutchison Essar are not taxable
under the provisions of the Act. As per the government, the verdict
was inconsistent with the intention of the law, and thus an
amendment was brought by the Finance Act, 2012, with a
retrospective effect from 1961. The amendment clarified that the
gains arising from the sale of a foreign company's share are
taxable in India if such a share, directly or indirectly, derives
its value substantially from the assets located in India.
