• UGI USER
  • Aug 01, 2024
  • 5 Likes
  • 0 Comments

SUPREME COURT’S REVIEW ON RETROSPECTIVE TAXES

Why in the news?

  • The Supreme Court reserves order on whether its July 25 judgement on State taxation of mines and minerals should be applied retrospectively.
  • Solicitor-General Tushar Mehta argues against retrospective application, citing potential severe impacts on industries and the common man.
Source:ET

Judgement Background:

  • The July 25 verdict, by an 8:1 majority, affirmed State legislatures’ power to tax mineral rights, unrestricted by Parliament.
  • The ruling supports federalism and addresses economic imbalances in mineral-rich States.

Concerns and Risks:

  • Retrospective taxes could burden companies, potentially leading to bankruptcy risks.
  • Senior advocate Harish Salve highlights the potential financial strain on companies, including public sector undertakings (PSUs), based on historical tax demands.
What is a Retrospective tax ?

  • Definition: Retrospective tax imposes an additional tax on past transactions.
  • Implementation: Allows nations to tax products, goods, or services from a date before the law’s enactment.
  • Purpose: Corrects anomalies in tax policies and closes loopholes.
  • Impact: Hurts companies that previously interpreted tax rules differently.