Cairn Energy in wait and watch mode even after the bill to kill retro tax is tabled in the Parliament
Cairn Energyhad started seizing Indian assets, beginning with 20 of them in France amounting to $23 million.
- The British oil and gas exploration company had earlier said it had identified Indian assets worth $70 billion across the world.
- While the decision to kill retro tax and withdraw demands pursued thereunder benefits Cairn Energy, it has chosen to wait and watch how the situation unfolds.
AdvertisementCairn Energy is not making any notable statements and has instead chosen to wait and watch how the Indian government’s bill to kill retrospective taxation unfolds. The Indian government had originally demanded over ₹10,200 crore in 2015 from the company for alleged capital gains made in 2006.
In a statement filed on the London Stock Exchange, the British oil and gas exploration company said, “We have noted the introduction to the Indian parliament of the Taxation Laws (Amendment) Bill 2021, which proposes certain amendments to the retrospective taxation measures that were introduced by the Finance Act 2012. We are monitoring the situation and will provide a further update in due course.”
Indian Finance Minister Nirmala Sitharaman has tabled a bill in the Parliament to amend taxation laws, burying the 2012 law that brought retrospective taxation. This allowed the government to tax profits from prior years, even though they were not taxable when the transaction took place.
To recall, India had lost an arbitration case at the Hague tribunal, which it refused to accept and filed an appeal in Singapore.
“We want to make a predictable tax regime both for Indian and foreign investors, that is what we desire. We have to do it in a way that is respectful of India's sovereignty, respectful of Parliament's right to legislate, it is that reconciliation that has been complicated,” said Finance Secretary TV Somanathan in an interview with CNBC TV18.
The decision to scrap retro tax affects not just Cairn Energy, but UK-based telecom giant Vodafone, among others. With that said, the Indian government will have to reportedly pay around ₹7,900 crore to Cairn while it has no such liability in the Vodafone case.
The decision might have been primarily motivated by Cairn Energy’s decision to seize Indian assets across the world. For context, the British company had reportedly seized Indian assets worth over $23 million in France.
This was among the first of many to come, as the company said it had identified Indian assets worth $70 billion across the world.
Indian government brings in a bill to bury the infamous retrospective tax that haunted Cairn and Vodafone for nearly a decade
A brief history of India’s retrospective tax law that would finally be upturned for good
Taxation and industry experts cheer the potential withdrawal of retrospective tax
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