Indirect Transfers – Evolution Of Law & Recent Dicta

Indirect transfer controversy has been the most discussed issue in the Indian tax ecosystem. It began when Vodafone International Holdings Ltd acquired an indirect holding in an Indian entity, to the recent ruling of the Hon'ble High Court of Delhi in Augustus Capital Pte Ltd¹ (dealing with small investor exemption). The controversy has spanned for over a decade and has involved various Courts and Tribunals in India. To add fuel to this controversy, a retrospective amendment was introduced in 2012 to tax the indirect transfer of shares in India, with the provision being effective from 1962. Although this retrospective amendment was eventually withdrawn in 2021, certain issues arising from the amendment continue to require clarity.