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Recently, the Government of India has introduced the Taxation Laws (Amendment) Bill, 2021 in the Lok Sabha.
- It allows a country to pass a rule on taxing certain products, items or services and deals and charge companies from a time behind the date on which the law is passed.
- Retrospective taxation hurts companies that had knowingly or unknowingly interpreted the tax rules differently.
- Apart from India, many countries including the USA, the UK, the Netherlands, Canada, Belgium, Australia and Italy have retrospectively taxed companies.
- This gain or profit comes under the category of ‘income’.
- The capital gain tax will be required to be paid for that amount in the year in which the transfer of the capital asset takes place.
- Capital gains can be reduced by deducting the capital losses that occur when a taxable asset is sold for less than the original purchase price.