The problem with backdating taxes is that the taxpayer will have to continuously guess how much of his current income will be taken away at a later date. This is the crux of the Parthasarathi Shome committee report on retrospective taxation of cross-border acquisition of Indian assets, like Vodafoneandrsquo;s $11.2 billion purchase of Hutchisonandrsquo;s stake in the countryandrsquo;s third largest telecom service provider in 2007.The Supreme Court in January ruled against the taxman, who was claiming Rs. 11,200 crore in tax, penalty and interest. The court conceded that Indian law was incapable of plugging a widely used tax dodge by inbound foreign investment. The message for the government in the verdict was that the law needed to be changed to curb treaty shopping, the practice of routing investments through letter-box companies in havens like Mauritius to avoid paying taxes in India.Presenting his last budget in March, the then finance minister Pranab Mukherjee, altered the Income Tax Act to tax such deals with retrospective effect. His argument was since the court felt the intent of the law was not clear, it had to be explicitly clarified for the entire past life of the Income Tax Act, which was enacted in 1962.This last bit - that deals done earlier could be taxed -raised a chorus of protest from the investing community, and the finance ministry under P Chidambaram sought an independent review of its stand. Mr Shome, a tax expert of international standing, has now told the government what it knew all this while: taxes in retrospect are best avoided.Specifically, they must never be used to merely raise tax revenue. In the Vodafone case, the Shome committee is unequivocal: the company to claim tax from is Hutchison, which made the profit from the sale of its stake in the telecom company.Vodafone was not required by the extant law to withhold capital gains tax. Since Vodafone made no profit in the deal, the question of interest and penalties on back taxes does not arise.Mr Chidambaram has indicated his desire to reverse the decision as soon as possible, even before the next budget when, normally, amendments to the Income Tax Act are undertaken. He reckons investors will return to the table once the fog over retrospective taxes is lifted.Q. Which one of these options best explains the reference the author makes to the practice of treaty shopping?a)Foreign investors route their investments to India through illegal means to avoid paying taxes.b)It is easier to invest in India by setting up a company in a tax free country like Mauritius.c)In order to avoid tax, it is possible for investors to bring in their investments into India by using obsolete tax laws.d)In order to avoid paying tax in India, it is possible for investors to bring in their investments into India through companies set up for this purpose in a different country.Correct answer is option 'D'. Can you explain this answer?

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The Supreme Court in January ruled against the taxman, who was claiming Rs. 11,200 crore in tax, penalty and interest. The court conceded that Indian law was incapable of plugging a widely used tax dodge by inbound foreign investment. The message for the government in the verdict was that the law needed to be changed to curb treaty shopping, the practice of routing investments through letter-box companies in havens like Mauritius to avoid paying taxes in India.

Presenting his last budget in March, the then finance minister Pranab Mukherjee, altered the Income Tax Act to tax such deals with retrospective effect. His argument was since the court felt the intent of the law was not clear, it had to be explicitly clarified for the entire past life of the Income Tax Act, which was enacted in 1962.

This last bit - that deals done earlier could be taxed -raised a chorus of protest from the investing community, and the finance ministry under P Chidambaram sought an independent review of its stand. Mr Shome, a tax expert of international standing, has now told the government what it knew all this while: taxes in retrospect are best avoided.

Specifically, they must never be used to merely raise tax revenue. In the Vodafone case, the Shome committee is unequivocal: the company to claim tax from is Hutchison, which made the profit from the sale of its stake in the telecom company.

Vodafone was not required by the extant law to withhold capital gains tax. Since Vodafone made no profit in the deal, the question of interest and penalties on back taxes does not arise.

Mr Chidambaram has indicated his desire to reverse the decision as soon as possible, even before the next budget when, normally, amendments to the Income Tax Act are undertaken. He reckons investors will return to the table once the fog over retrospective taxes is lifted.

Q. Which one of these options best explains the reference the author makes to the practice of treaty shopping?

a)
Foreign investors route their investments to India through illegal means to avoid paying taxes.
b)
It is easier to invest in India by setting up a company in a tax free country like Mauritius.
c)
In order to avoid tax, it is possible for investors to bring in their investments into India by using obsolete tax laws.
d)
In order to avoid paying tax in India, it is possible for investors to bring in their investments into India through companies set up for this purpose in a different country.

Correct answer is option 'D'. Can you explain this answer?

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The problem with backdating taxes is that the taxpayer will have to co...

Refer to the third paragraph. The passage discusses the issue of tax evasion and states that investments are routed into India through countries like Mauritius so that investors can avoid paying taxes. This is done by setting up a letter-box company in Mauritius so that investors can avoid paying tax in India. It also indicates that Mauritius is a tax friendly country (havens) but not necessarily tax free. Thus, option (b) can be ruled out and option (d) is the answer. Option (c) can be ruled out because nothing has been mentioned about “obsolete tax laws” in the passage. Option (a) can be ruled out because treaty shopping is a loop hole that investors have discovered, however, this doesn’t mean that the practice is illegal.

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The problem with backdating taxes is that the taxpayer will have to continuously guess how much of his current income will be taken away at a later date. This is the crux of the Parthasarathi Shome committee report on retrospective taxation of cross-border acquisition of Indian assets, like Vodafone’s $11.2 billion purchase of Hutchison’s stake in the country’s third largest telecom service provider in 2007.The Supreme Court in January ruled against the taxman, who was claiming Rs. 11,200 crore in tax, penalty and interest. The court conceded that Indian law was incapable of plugging a widely used tax dodge by inbound foreign investment. The message for the government in the verdict was that the law needed to be changed to curb treaty shopping, the practice of routing investments through letter-box companies in havens like Mauritius to avoid paying taxes in India.Presenting his last budget in March, the then finance minister Pranab Mukherjee, altered the Income Tax Act to tax such deals with retrospective effect. His argument was since the court felt the intent of the law was not clear, it had to be explicitly clarified for the entire past life of the Income Tax Act, which was enacted in 1962.This last bit - that deals done earlier could be taxed -raised a chorus of protest from the investing community, and the finance ministry under P Chidambaram sought an independent review of its stand. Mr Shome, a tax expert of international standing, has now told the government what it knew all this while: taxes in retrospect are best avoided.Specifically, they must never be used to merely raise tax revenue. In the Vodafone case, the Shome committee is unequivocal: the company to claim tax from is Hutchison, which made the profit from the sale of its stake in the telecom company.Vodafone was not required by the extant law to withhold capital gains tax. Since Vodafone made no profit in the deal, the question of interest and penalties on back taxes does not arise.Mr Chidambaram has indicated his desire to reverse the decision as soon as possible, even before the next budget when, normally, amendments to the Income Tax Act are undertaken. He reckons investors will return to the table once the fog over retrospective taxes is lifted.Q. As per the information in the passage, the author is most likely to agree with which of the following?

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Consider the following assumptions. 1. The Suprem e Court has ruled in f av our of Vodafone mainly because the law does not allow for a case against the latter. 2. The tax claims that are being made should be rightfully made against Hutchison and not Vodafone.With reference to the above passage which of the following assumptions is/are valid?The problem with backdating taxes is that the taxpayer will have to continuously guess how much of his current income will be taken away at a later date. This is the crux of the Parthasarathi Shome committee report on retrospective taxation of cross-border acquisition of Indian assets, like Vodafone’s $11.2 billion purchase of Hutchison’s stake in the country’s third largest telecom service provider in 2007.The Supreme Court in January ruled against the taxman, who was claiming Rs. 11,200 crore in tax, penalty and interest. The court conceded that Indian law was incapable of plugging a widely used tax dodge by inbound foreign investment. The message for the government in the verdict was that the law needed to be changed to curb treaty shopping, the practice of routing investments through letter-box companies in havens like Mauritius to avoid paying taxes in India.Presenting his last budget in March, the then finance minister Pranab Mukherjee, altered the Income Tax Act to tax such deals with retrospective effect. His argument was since the court felt the intent of the law was not clear, it had to be explicitly clarified for the entire past life of the Income Tax Act, which was enacted in 1962.This last bit - that deals done earlier could be taxed -raised a chorus of protest from the investing community, and the finance ministry under P Chidambaram sought an independent review of its stand. Mr Shome, a tax expert of international standing, has now told the government what it knew all this while: taxes in retrospect are best avoided.Specifically, they must never be used to merely raise tax revenue. In the Vodafone case, the Shome committee is unequivocal: the company to claim tax from is Hutchison, which made the profit from the sale of its stake in the telecom company.Vodafone was not required by the extant law to withhold capital gains tax. Since Vodafone made no profit in the deal, the question of interest and penalties on back taxes does not arise.Mr Chidambaram has indicated his desire to reverse the decision as soon as possible, even before the next budget when, normally, amendments to the Income Tax Act are undertaken. He reckons investors will return to the table once the fog over retrospective taxes is lifted.Q. Consider the following assumptions.1. The Supreme Court has ruled in favour of Vodafone mainly because the law does not allow for a case against the latter.2. The tax claims that are being made should be rightfully made against Hutchison and not Vodafone.With reference to the above passage which of the following assumptions is/are valid?

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The problem with backdating taxes is that the taxpayer will have to continuously guess how much of his current income will be taken away at a later date. This is the crux of the Parthasarathi Shome committee report on retrospective taxation of cross-border acquisition of Indian assets, like Vodafone’s $11.2 billion purchase of Hutchison’s stake in the country’s third largest telecom service provider in 2007.The Supreme Court in January ruled against the taxman, who was claiming Rs. 11,200 crore in tax, penalty and interest. The court conceded that Indian law was incapable of plugging a widely used tax dodge by inbound foreign investment. The message for the government in the verdict was that the law needed to be changed to curb treaty shopping, the practice of routing investments through letter-box companies in havens like Mauritius to avoid paying taxes in India.Presenting his last budget in March, the then finance minister Pranab Mukherjee, altered the Income Tax Act to tax such deals with retrospective effect. His argument was since the court felt the intent of the law was not clear, it had to be explicitly clarified for the entire past life of the Income Tax Act, which was enacted in 1962.This last bit - that deals done earlier could be taxed -raised a chorus of protest from the investing community, and the finance ministry under P Chidambaram sought an independent review of its stand. Mr Shome, a tax expert of international standing, has now told the government what it knew all this while: taxes in retrospect are best avoided.Specifically, they must never be used to merely raise tax revenue. In the Vodafone case, the Shome committee is unequivocal: the company to claim tax from is Hutchison, which made the profit from the sale of its stake in the telecom company.Vodafone was not required by the extant law to withhold capital gains tax. Since Vodafone made no profit in the deal, the question of interest and penalties on back taxes does not arise.Mr Chidambaram has indicated his desire to reverse the decision as soon as possible, even before the next budget when, normally, amendments to the Income Tax Act are undertaken. He reckons investors will return to the table once the fog over retrospective taxes is lifted.Q. Consider the following statements:1. The Income Tax Act was enacted in 1963.2. Mr. Parthasarathi Shome was an economist.According to the above passage, which of the statements is/are valid?

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The problem with backdating taxes is that the taxpayer will have to continuously guess how much of his current income will be taken away at a later date. This is the crux of the Parthasarathi Shome committee report on retrospective taxation of cross-border acquisition of Indian assets, like Vodafone’s $11.2 billion purchase of Hutchison’s stake in the country’s third largest telecom service provider in 2007.The Supreme Court in January ruled against the taxman, who was claiming Rs. 11,200 crore in tax, penalty and interest. The court conceded that Indian law was incapable of plugging a widely used tax dodge by inbound foreign investment. The message for the government in the verdict was that the law needed to be changed to curb treaty shopping, the practice of routing investments through letter-box companies in havens like Mauritius to avoid paying taxes in India.Presenting his last budget in March, the then finance minister Pranab Mukherjee, altered the Income Tax Act to tax such deals with retrospective effect. His argument was since the court felt the intent of the law was not clear, it had to be explicitly clarified for the entire past life of the Income Tax Act, which was enacted in 1962.This last bit - that deals done earlier could be taxed -raised a chorus of protest from the investing community, and the finance ministry under P Chidambaram sought an independent review of its stand. Mr Shome, a tax expert of international standing, has now told the government what it knew all this while: taxes in retrospect are best avoided.Specifically, they must never be used to merely raise tax revenue. In the Vodafone case, the Shome committee is unequivocal: the company to claim tax from is Hutchison, which made the profit from the sale of its stake in the telecom company.Vodafone was not required by the extant law to withhold capital gains tax. Since Vodafone made no profit in the deal, the question of interest and penalties on back taxes does not arise.Mr Chidambaram has indicated his desire to reverse the decision as soon as possible, even before the next budget when, normally, amendments to the Income Tax Act are undertaken. He reckons investors will return to the table once the fog over retrospective taxes is lifted.Q. Consider the following statements:1. Vodafone bought Hutchison’s stake in the year 2008.2. The then Finance Minister Pranab Mukherjee did not alter the Income Tax Act.According to the above passage, which of the statements is/are valid?

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X, Y and Z were partners. They had no partnership deed. They had been in business for 3 years. Profit during 2014 was 40,000, 2015 50,000 and 2016 63,000. During 2017, they agreed to share profits in ratio 2:2:1 with retrospective effect. It was also decided to provide interest on partners' capital @ 5% p.a. (fixe d). Their capitals were 1,00,000, 80,000 and 60,000 respectively. Pass entry to adjust the capital accounts.?

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The problem with backdating taxes is that the taxpayer will have to continuously guess how much of his current income will be taken away at a later date. This is the crux of the Parthasarathi Shome committee report on retrospective taxation of cross-border acquisition of Indian assets, like Vodafone’s $11.2 billion purchase of Hutchison’s stake in the country’s third largest telecom service provider in 2007.The Supreme Court in January ruled against the taxman, who was claiming Rs. 11,200 crore in tax, penalty and interest. The court conceded that Indian law was incapable of plugging a widely used tax dodge by inbound foreign investment. The message for the government in the verdict was that the law needed to be changed to curb treaty shopping, the practice of routing investments through letter-box companies in havens like Mauritius to avoid paying taxes in India.Presenting his last budget in March, the then finance minister Pranab Mukherjee, altered the Income Tax Act to tax such deals with retrospective effect. His argument was since the court felt the intent of the law was not clear, it had to be explicitly clarified for the entire past life of the Income Tax Act, which was enacted in 1962.This last bit - that deals done earlier could be taxed -raised a chorus of protest from the investing community, and the finance ministry under P Chidambaram sought an independent review of its stand. Mr Shome, a tax expert of international standing, has now told the government what it knew all this while: taxes in retrospect are best avoided.Specifically, they must never be used to merely raise tax revenue. In the Vodafone case, the Shome committee is unequivocal: the company to claim tax from is Hutchison, which made the profit from the sale of its stake in the telecom company.Vodafone was not required by the extant law to withhold capital gains tax. Since Vodafone made no profit in the deal, the question of interest and penalties on back taxes does not arise.Mr Chidambaram has indicated his desire to reverse the decision as soon as possible, even before the next budget when, normally, amendments to the Income Tax Act are undertaken. He reckons investors will return to the table once the fog over retrospective taxes is lifted.Q. Which one of these options best explains the reference the author makes to the practice of treaty shopping?a)Foreign investors route their investments to India through illegal means to avoid paying taxes.b)It is easier to invest in India by setting up a company in a tax free country like Mauritius.c)In order to avoid tax, it is possible for investors to bring in their investments into India by using obsolete tax laws.d)In order to avoid paying tax in India, it is possible for investors to bring in their investments into India through companies set up for this purpose in a different country.Correct answer is option 'D'. Can you explain this answer?

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The problem with backdating taxes is that the taxpayer will have to continuously guess how much of his current income will be taken away at a later date. This is the crux of the Parthasarathi Shome committee report on retrospective taxation of cross-border acquisition of Indian assets, like Vodafone’s $11.2 billion purchase of Hutchison’s stake in the country’s third largest telecom service provider in 2007.The Supreme Court in January ruled against the taxman, who was claiming Rs. 11,200 crore in tax, penalty and interest. The court conceded that Indian law was incapable of plugging a widely used tax dodge by inbound foreign investment. The message for the government in the verdict was that the law needed to be changed to curb treaty shopping, the practice of routing investments through letter-box companies in havens like Mauritius to avoid paying taxes in India.Presenting his last budget in March, the then finance minister Pranab Mukherjee, altered the Income Tax Act to tax such deals with retrospective effect. His argument was since the court felt the intent of the law was not clear, it had to be explicitly clarified for the entire past life of the Income Tax Act, which was enacted in 1962.This last bit - that deals done earlier could be taxed -raised a chorus of protest from the investing community, and the finance ministry under P Chidambaram sought an independent review of its stand. Mr Shome, a tax expert of international standing, has now told the government what it knew all this while: taxes in retrospect are best avoided.Specifically, they must never be used to merely raise tax revenue. In the Vodafone case, the Shome committee is unequivocal: the company to claim tax from is Hutchison, which made the profit from the sale of its stake in the telecom company.Vodafone was not required by the extant law to withhold capital gains tax. Since Vodafone made no profit in the deal, the question of interest and penalties on back taxes does not arise.Mr Chidambaram has indicated his desire to reverse the decision as soon as possible, even before the next budget when, normally, amendments to the Income Tax Act are undertaken. He reckons investors will return to the table once the fog over retrospective taxes is lifted.Q. Which one of these options best explains the reference the author makes to the practice of treaty shopping?a)Foreign investors route their investments to India through illegal means to avoid paying taxes.b)It is easier to invest in India by setting up a company in a tax free country like Mauritius.c)In order to avoid tax, it is possible for investors to bring in their investments into India by using obsolete tax laws.d)In order to avoid paying tax in India, it is possible for investors to bring in their investments into India through companies set up for this purpose in a different country.Correct answer is option 'D'. Can you explain this answer? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about The problem with backdating taxes is that the taxpayer will have to continuously guess how much of his current income will be taken away at a later date. This is the crux of the Parthasarathi Shome committee report on retrospective taxation of cross-border acquisition of Indian assets, like Vodafone’s $11.2 billion purchase of Hutchison’s stake in the country’s third largest telecom service provider in 2007.The Supreme Court in January ruled against the taxman, who was claiming Rs. 11,200 crore in tax, penalty and interest. The court conceded that Indian law was incapable of plugging a widely used tax dodge by inbound foreign investment. The message for the government in the verdict was that the law needed to be changed to curb treaty shopping, the practice of routing investments through letter-box companies in havens like Mauritius to avoid paying taxes in India.Presenting his last budget in March, the then finance minister Pranab Mukherjee, altered the Income Tax Act to tax such deals with retrospective effect. His argument was since the court felt the intent of the law was not clear, it had to be explicitly clarified for the entire past life of the Income Tax Act, which was enacted in 1962.This last bit - that deals done earlier could be taxed -raised a chorus of protest from the investing community, and the finance ministry under P Chidambaram sought an independent review of its stand. Mr Shome, a tax expert of international standing, has now told the government what it knew all this while: taxes in retrospect are best avoided.Specifically, they must never be used to merely raise tax revenue. In the Vodafone case, the Shome committee is unequivocal: the company to claim tax from is Hutchison, which made the profit from the sale of its stake in the telecom company.Vodafone was not required by the extant law to withhold capital gains tax. Since Vodafone made no profit in the deal, the question of interest and penalties on back taxes does not arise.Mr Chidambaram has indicated his desire to reverse the decision as soon as possible, even before the next budget when, normally, amendments to the Income Tax Act are undertaken. He reckons investors will return to the table once the fog over retrospective taxes is lifted.Q. Which one of these options best explains the reference the author makes to the practice of treaty shopping?a)Foreign investors route their investments to India through illegal means to avoid paying taxes.b)It is easier to invest in India by setting up a company in a tax free country like Mauritius.c)In order to avoid tax, it is possible for investors to bring in their investments into India by using obsolete tax laws.d)In order to avoid paying tax in India, it is possible for investors to bring in their investments into India through companies set up for this purpose in a different country.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The problem with backdating taxes is that the taxpayer will have to continuously guess how much of his current income will be taken away at a later date. This is the crux of the Parthasarathi Shome committee report on retrospective taxation of cross-border acquisition of Indian assets, like Vodafone’s $11.2 billion purchase of Hutchison’s stake in the country’s third largest telecom service provider in 2007.The Supreme Court in January ruled against the taxman, who was claiming Rs. 11,200 crore in tax, penalty and interest. The court conceded that Indian law was incapable of plugging a widely used tax dodge by inbound foreign investment. The message for the government in the verdict was that the law needed to be changed to curb treaty shopping, the practice of routing investments through letter-box companies in havens like Mauritius to avoid paying taxes in India.Presenting his last budget in March, the then finance minister Pranab Mukherjee, altered the Income Tax Act to tax such deals with retrospective effect. His argument was since the court felt the intent of the law was not clear, it had to be explicitly clarified for the entire past life of the Income Tax Act, which was enacted in 1962.This last bit - that deals done earlier could be taxed -raised a chorus of protest from the investing community, and the finance ministry under P Chidambaram sought an independent review of its stand. Mr Shome, a tax expert of international standing, has now told the government what it knew all this while: taxes in retrospect are best avoided.Specifically, they must never be used to merely raise tax revenue. In the Vodafone case, the Shome committee is unequivocal: the company to claim tax from is Hutchison, which made the profit from the sale of its stake in the telecom company.Vodafone was not required by the extant law to withhold capital gains tax. Since Vodafone made no profit in the deal, the question of interest and penalties on back taxes does not arise.Mr Chidambaram has indicated his desire to reverse the decision as soon as possible, even before the next budget when, normally, amendments to the Income Tax Act are undertaken. He reckons investors will return to the table once the fog over retrospective taxes is lifted.Q. Which one of these options best explains the reference the author makes to the practice of treaty shopping?a)Foreign investors route their investments to India through illegal means to avoid paying taxes.b)It is easier to invest in India by setting up a company in a tax free country like Mauritius.c)In order to avoid tax, it is possible for investors to bring in their investments into India by using obsolete tax laws.d)In order to avoid paying tax in India, it is possible for investors to bring in their investments into India through companies set up for this purpose in a different country.Correct answer is option 'D'. Can you explain this answer?.

Solutions for The problem with backdating taxes is that the taxpayer will have to continuously guess how much of his current income will be taken away at a later date. This is the crux of the Parthasarathi Shome committee report on retrospective taxation of cross-border acquisition of Indian assets, like Vodafone’s $11.2 billion purchase of Hutchison’s stake in the country’s third largest telecom service provider in 2007.The Supreme Court in January ruled against the taxman, who was claiming Rs. 11,200 crore in tax, penalty and interest. The court conceded that Indian law was incapable of plugging a widely used tax dodge by inbound foreign investment. The message for the government in the verdict was that the law needed to be changed to curb treaty shopping, the practice of routing investments through letter-box companies in havens like Mauritius to avoid paying taxes in India.Presenting his last budget in March, the then finance minister Pranab Mukherjee, altered the Income Tax Act to tax such deals with retrospective effect. His argument was since the court felt the intent of the law was not clear, it had to be explicitly clarified for the entire past life of the Income Tax Act, which was enacted in 1962.This last bit - that deals done earlier could be taxed -raised a chorus of protest from the investing community, and the finance ministry under P Chidambaram sought an independent review of its stand. Mr Shome, a tax expert of international standing, has now told the government what it knew all this while: taxes in retrospect are best avoided.Specifically, they must never be used to merely raise tax revenue. In the Vodafone case, the Shome committee is unequivocal: the company to claim tax from is Hutchison, which made the profit from the sale of its stake in the telecom company.Vodafone was not required by the extant law to withhold capital gains tax. Since Vodafone made no profit in the deal, the question of interest and penalties on back taxes does not arise.Mr Chidambaram has indicated his desire to reverse the decision as soon as possible, even before the next budget when, normally, amendments to the Income Tax Act are undertaken. He reckons investors will return to the table once the fog over retrospective taxes is lifted.Q. Which one of these options best explains the reference the author makes to the practice of treaty shopping?a)Foreign investors route their investments to India through illegal means to avoid paying taxes.b)It is easier to invest in India by setting up a company in a tax free country like Mauritius.c)In order to avoid tax, it is possible for investors to bring in their investments into India by using obsolete tax laws.d)In order to avoid paying tax in India, it is possible for investors to bring in their investments into India through companies set up for this purpose in a different country.Correct answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for Class 12. Download more important topics, notes, lectures and mock test series for Class 12 Exam by signing up for free.

Here you can find the meaning of The problem with backdating taxes is that the taxpayer will have to continuously guess how much of his current income will be taken away at a later date. This is the crux of the Parthasarathi Shome committee report on retrospective taxation of cross-border acquisition of Indian assets, like Vodafone’s $11.2 billion purchase of Hutchison’s stake in the country’s third largest telecom service provider in 2007.The Supreme Court in January ruled against the taxman, who was claiming Rs. 11,200 crore in tax, penalty and interest. The court conceded that Indian law was incapable of plugging a widely used tax dodge by inbound foreign investment. The message for the government in the verdict was that the law needed to be changed to curb treaty shopping, the practice of routing investments through letter-box companies in havens like Mauritius to avoid paying taxes in India.Presenting his last budget in March, the then finance minister Pranab Mukherjee, altered the Income Tax Act to tax such deals with retrospective effect. His argument was since the court felt the intent of the law was not clear, it had to be explicitly clarified for the entire past life of the Income Tax Act, which was enacted in 1962.This last bit - that deals done earlier could be taxed -raised a chorus of protest from the investing community, and the finance ministry under P Chidambaram sought an independent review of its stand. Mr Shome, a tax expert of international standing, has now told the government what it knew all this while: taxes in retrospect are best avoided.Specifically, they must never be used to merely raise tax revenue. In the Vodafone case, the Shome committee is unequivocal: the company to claim tax from is Hutchison, which made the profit from the sale of its stake in the telecom company.Vodafone was not required by the extant law to withhold capital gains tax. Since Vodafone made no profit in the deal, the question of interest and penalties on back taxes does not arise.Mr Chidambaram has indicated his desire to reverse the decision as soon as possible, even before the next budget when, normally, amendments to the Income Tax Act are undertaken. He reckons investors will return to the table once the fog over retrospective taxes is lifted.Q. Which one of these options best explains the reference the author makes to the practice of treaty shopping?a)Foreign investors route their investments to India through illegal means to avoid paying taxes.b)It is easier to invest in India by setting up a company in a tax free country like Mauritius.c)In order to avoid tax, it is possible for investors to bring in their investments into India by using obsolete tax laws.d)In order to avoid paying tax in India, it is possible for investors to bring in their investments into India through companies set up for this purpose in a different country.Correct answer is option 'D'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of The problem with backdating taxes is that the taxpayer will have to continuously guess how much of his current income will be taken away at a later date. This is the crux of the Parthasarathi Shome committee report on retrospective taxation of cross-border acquisition of Indian assets, like Vodafone’s $11.2 billion purchase of Hutchison’s stake in the country’s third largest telecom service provider in 2007.The Supreme Court in January ruled against the taxman, who was claiming Rs. 11,200 crore in tax, penalty and interest. The court conceded that Indian law was incapable of plugging a widely used tax dodge by inbound foreign investment. The message for the government in the verdict was that the law needed to be changed to curb treaty shopping, the practice of routing investments through letter-box companies in havens like Mauritius to avoid paying taxes in India.Presenting his last budget in March, the then finance minister Pranab Mukherjee, altered the Income Tax Act to tax such deals with retrospective effect. His argument was since the court felt the intent of the law was not clear, it had to be explicitly clarified for the entire past life of the Income Tax Act, which was enacted in 1962.This last bit - that deals done earlier could be taxed -raised a chorus of protest from the investing community, and the finance ministry under P Chidambaram sought an independent review of its stand. Mr Shome, a tax expert of international standing, has now told the government what it knew all this while: taxes in retrospect are best avoided.Specifically, they must never be used to merely raise tax revenue. In the Vodafone case, the Shome committee is unequivocal: the company to claim tax from is Hutchison, which made the profit from the sale of its stake in the telecom company.Vodafone was not required by the extant law to withhold capital gains tax. Since Vodafone made no profit in the deal, the question of interest and penalties on back taxes does not arise.Mr Chidambaram has indicated his desire to reverse the decision as soon as possible, even before the next budget when, normally, amendments to the Income Tax Act are undertaken. He reckons investors will return to the table once the fog over retrospective taxes is lifted.Q. Which one of these options best explains the reference the author makes to the practice of treaty shopping?a)Foreign investors route their investments to India through illegal means to avoid paying taxes.b)It is easier to invest in India by setting up a company in a tax free country like Mauritius.c)In order to avoid tax, it is possible for investors to bring in their investments into India by using obsolete tax laws.d)In order to avoid paying tax in India, it is possible for investors to bring in their investments into India through companies set up for this purpose in a different country.Correct answer is option 'D'. Can you explain this answer?, a detailed solution for The problem with backdating taxes is that the taxpayer will have to continuously guess how much of his current income will be taken away at a later date. This is the crux of the Parthasarathi Shome committee report on retrospective taxation of cross-border acquisition of Indian assets, like Vodafone’s $11.2 billion purchase of Hutchison’s stake in the country’s third largest telecom service provider in 2007.The Supreme Court in January ruled against the taxman, who was claiming Rs. 11,200 crore in tax, penalty and interest. The court conceded that Indian law was incapable of plugging a widely used tax dodge by inbound foreign investment. The message for the government in the verdict was that the law needed to be changed to curb treaty shopping, the practice of routing investments through letter-box companies in havens like Mauritius to avoid paying taxes in India.Presenting his last budget in March, the then finance minister Pranab Mukherjee, altered the Income Tax Act to tax such deals with retrospective effect. His argument was since the court felt the intent of the law was not clear, it had to be explicitly clarified for the entire past life of the Income Tax Act, which was enacted in 1962.This last bit - that deals done earlier could be taxed -raised a chorus of protest from the investing community, and the finance ministry under P Chidambaram sought an independent review of its stand. Mr Shome, a tax expert of international standing, has now told the government what it knew all this while: taxes in retrospect are best avoided.Specifically, they must never be used to merely raise tax revenue. In the Vodafone case, the Shome committee is unequivocal: the company to claim tax from is Hutchison, which made the profit from the sale of its stake in the telecom company.Vodafone was not required by the extant law to withhold capital gains tax. Since Vodafone made no profit in the deal, the question of interest and penalties on back taxes does not arise.Mr Chidambaram has indicated his desire to reverse the decision as soon as possible, even before the next budget when, normally, amendments to the Income Tax Act are undertaken. He reckons investors will return to the table once the fog over retrospective taxes is lifted.Q. Which one of these options best explains the reference the author makes to the practice of treaty shopping?a)Foreign investors route their investments to India through illegal means to avoid paying taxes.b)It is easier to invest in India by setting up a company in a tax free country like Mauritius.c)In order to avoid tax, it is possible for investors to bring in their investments into India by using obsolete tax laws.d)In order to avoid paying tax in India, it is possible for investors to bring in their investments into India through companies set up for this purpose in a different country.Correct answer is option 'D'. Can you explain this answer? has been provided alongside types of The problem with backdating taxes is that the taxpayer will have to continuously guess how much of his current income will be taken away at a later date. This is the crux of the Parthasarathi Shome committee report on retrospective taxation of cross-border acquisition of Indian assets, like Vodafone’s $11.2 billion purchase of Hutchison’s stake in the country’s third largest telecom service provider in 2007.The Supreme Court in January ruled against the taxman, who was claiming Rs. 11,200 crore in tax, penalty and interest. The court conceded that Indian law was incapable of plugging a widely used tax dodge by inbound foreign investment. The message for the government in the verdict was that the law needed to be changed to curb treaty shopping, the practice of routing investments through letter-box companies in havens like Mauritius to avoid paying taxes in India.Presenting his last budget in March, the then finance minister Pranab Mukherjee, altered the Income Tax Act to tax such deals with retrospective effect. His argument was since the court felt the intent of the law was not clear, it had to be explicitly clarified for the entire past life of the Income Tax Act, which was enacted in 1962.This last bit - that deals done earlier could be taxed -raised a chorus of protest from the investing community, and the finance ministry under P Chidambaram sought an independent review of its stand. Mr Shome, a tax expert of international standing, has now told the government what it knew all this while: taxes in retrospect are best avoided.Specifically, they must never be used to merely raise tax revenue. In the Vodafone case, the Shome committee is unequivocal: the company to claim tax from is Hutchison, which made the profit from the sale of its stake in the telecom company.Vodafone was not required by the extant law to withhold capital gains tax. Since Vodafone made no profit in the deal, the question of interest and penalties on back taxes does not arise.Mr Chidambaram has indicated his desire to reverse the decision as soon as possible, even before the next budget when, normally, amendments to the Income Tax Act are undertaken. He reckons investors will return to the table once the fog over retrospective taxes is lifted.Q. Which one of these options best explains the reference the author makes to the practice of treaty shopping?a)Foreign investors route their investments to India through illegal means to avoid paying taxes.b)It is easier to invest in India by setting up a company in a tax free country like Mauritius.c)In order to avoid tax, it is possible for investors to bring in their investments into India by using obsolete tax laws.d)In order to avoid paying tax in India, it is possible for investors to bring in their investments into India through companies set up for this purpose in a different country.Correct answer is option 'D'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice The problem with backdating taxes is that the taxpayer will have to continuously guess how much of his current income will be taken away at a later date. This is the crux of the Parthasarathi Shome committee report on retrospective taxation of cross-border acquisition of Indian assets, like Vodafone’s $11.2 billion purchase of Hutchison’s stake in the country’s third largest telecom service provider in 2007.The Supreme Court in January ruled against the taxman, who was claiming Rs. 11,200 crore in tax, penalty and interest. The court conceded that Indian law was incapable of plugging a widely used tax dodge by inbound foreign investment. The message for the government in the verdict was that the law needed to be changed to curb treaty shopping, the practice of routing investments through letter-box companies in havens like Mauritius to avoid paying taxes in India.Presenting his last budget in March, the then finance minister Pranab Mukherjee, altered the Income Tax Act to tax such deals with retrospective effect. His argument was since the court felt the intent of the law was not clear, it had to be explicitly clarified for the entire past life of the Income Tax Act, which was enacted in 1962.This last bit - that deals done earlier could be taxed -raised a chorus of protest from the investing community, and the finance ministry under P Chidambaram sought an independent review of its stand. Mr Shome, a tax expert of international standing, has now told the government what it knew all this while: taxes in retrospect are best avoided.Specifically, they must never be used to merely raise tax revenue. In the Vodafone case, the Shome committee is unequivocal: the company to claim tax from is Hutchison, which made the profit from the sale of its stake in the telecom company.Vodafone was not required by the extant law to withhold capital gains tax. Since Vodafone made no profit in the deal, the question of interest and penalties on back taxes does not arise.Mr Chidambaram has indicated his desire to reverse the decision as soon as possible, even before the next budget when, normally, amendments to the Income Tax Act are undertaken. He reckons investors will return to the table once the fog over retrospective taxes is lifted.Q. Which one of these options best explains the reference the author makes to the practice of treaty shopping?a)Foreign investors route their investments to India through illegal means to avoid paying taxes.b)It is easier to invest in India by setting up a company in a tax free country like Mauritius.c)In order to avoid tax, it is possible for investors to bring in their investments into India by using obsolete tax laws.d)In order to avoid paying tax in India, it is possible for investors to bring in their investments into India through companies set up for this purpose in a different country.Correct answer is option 'D'. Can you explain this answer? tests, examples and also practice Class 12 tests.

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