News: The government on Thursday took the first step towards doing away with the contentious retrospective tax law of 2012, which was used to raise large tax demands on foreign investors such as Vodafone and Cairn Energy, and blamed for vitiating India’s investment climate — less than a month after Cairn Energy secured an order from a French court to freeze India’s assets in Paris.
In 2012, Indian government had retrospectively amended Income-tax Act to justify the retrospective tax demand raised against Vodafone for buying Hutchison Telecommunication’s stake in Hutchison Essar.
The amendment made the Section 9(1)(i) of the Income-tax Act applicable retroactively to generate tax demands on income through or from the transfer of an asset or a capital asset situated in India in consequence of the transfer of a share or interest in a company or entity registered or incorporated outside India.
In 2014, the government once again exercised the 2012 amendment to raise tax demand against Cairn energy for an internal corporate restructuring carried out in 2006.
With the retrospective tax law gone, government has said that any tax assessment, reassessment or order under this rule made before May 28, 2012, the day it came into effect.
Demand under retrospective tax law raised before May 28, 2012, shall be nullified on fulfilment 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.
If the taxpayers paid the tax demand raised against them under retrospective tax law, then such amount shall be refunded to them, but no interest under section 244A shall be paid on that amount.
Income Tax demands had been raised in 17 cases under retrospective tax law. In two cases assessments are pending due to stay granted by High Court.
Arbitration under Bilateral Investment Protection Treaty with the United Kingdom and the Netherlands had been invoked in four cases, two of which India lost – against Cairn Energy and Vodafone. While the government has no liability against Vodafone, it still has to pay $1.2 billion to Cairn as arbitration award.
The retrospective tax law had spooked investors nine years ago, and continued to be a sore point for potential investors now, government acknowledged.
Centre expects the removal of retrospective law would lead to foreign investment growing in India, a much needed development as the country looks to reverse the impact of Covid-19 pandemic.
2. GEOSTATIONARY ORBIT
News: The satellite, EOS-03, will be carried on board the 14th flight of the GSLV, the GSLV-F10, and will place the satellite in a Geosynchronous Transfer Orbit. The satellite will reach the final geostationary orbit using its onboard propulsion system, ISRO said.
The EOS-03 is a state-of-the-art agile satellite that will enable real-time monitoring of natural disasters, waterbodies, crops, forest cover changes, among others.
A four-metre diameter Ogive-shaped payload fairing is being flown for the first time in this GSLV flight.
About Geostationary Transfer Orbit:
A geostationary orbit, also referred to as a geosynchronous equatorial orbit (GEO), is a circular geosynchronous orbit 35,786 kilometres (22,236 miles) in altitude above Earth’s equator (42,164 kilometers in radius from Earth’s center) and following the direction of Earth’s rotation.
An object in such an orbit has an orbital period equal to the Earth’s rotational period, one sidereal day, and so to ground observers it appears motionless, in a fixed position in the sky.
Communications satellites are often placed in a geostationary orbit so that Earth-based satellite antennas (located on Earth) do not have to rotate to track them but can be pointed permanently at the position in the sky where the satellites are located.
Weather satellites are also placed in this orbit for real-time monitoring and data collection, and navigation satellites to provide a known calibration point and enhance GPS accuracy.
Geostationary satellites are launched via a temporary orbit, and placed in a slot above a particular point on the Earth’s surface. The orbit requires some station keeping to keep its position, and modern retired satellites are placed in a higher graveyard orbit to avoid collisions.
3. AGALEGA ISLAND
News: Mauritius has denied a report that it has allowed India to build a military base on the remote island of Agalega, with a government official telling AFP that no such agreement exists between the two nations.
The Mauritian government denied any plans to allow a military installation on the Agalega island, home to about 300 people.
The report raised fears of a repeat of the 1965 decision by Britain to separate the Chagos Islands from Mauritius and set up a joint military base with the United States on Diego Garcia, the largest of the isles.
The decades-old move has sparked protests by Chagossians, who accuse Britain of carrying out an “illegal occupation” and barring them from their homeland.
Britain insists the islands belong to London and has renewed a lease agreement with the United States to use Diego Garcia until 2036.
Diego Garcia played a strategic role during the Cold War, and then as an airbase, including during the war in Afghanistan.