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Retro Tax Settlement: Cos Will Have to Indemnify Govt

New Delhi: Companies looking to settle their retrospective tax disputes would have to commit to indemnify the Indian government against any future claims in relation to their tax disputes.

The indemnity and commitment to not seek any damage from the Indian government or its affiliates will have to be furnished by the company has also any other interested party, the government said in the final rules notified late Friday. Companies will have to file a declaration with the income tax authorities along with a board resolution or legal authorization besides an indemnity bond, the rules said.

The Central Board of Direct Taxes notified the final rules for settlement of retrospective cases after incorporating certain changes following comments from stakeholders on draft rules, issued on August 28.

“……the declarant and all the interested parties shall indemnify, defend and hold harmless the Republic of India and Indian affiliates from and against any and all costs…,” the notification said.

They will have to file a claim within 45 days. The relevant principal commissioner of income tax has to give a certificate accepting or pass an order rejecting the claim in 15 days from receipt of the application, implying that the process can be completed in 60 days.

Once a tax refund claim is accepted, the companies will have to fulfill the specified condition including the withdrawal of all legal cases within 60 days. This period can be extended by another 60 days, implying that cases should be settled in maximum six months.

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