Home / Companies / News /  Cairn says 'monitoring situation' after India proposes to bury retro tax

Cairn Energy has said that it is monitoring the situation after Indian government proposed to scrap the retrospective tax law. The British oil and gas major said it will provide a further update in the matter in coming days.

After the proposal to scrap the law was tabled in Lok Sabha on Thursday, Cairn stated: "We have noted the introduction to the Indian parliament of the Taxation Laws (Amendment) Bill 2021, which proposes certain amendments to the retrospective taxation measures that were introduced by the Finance Act 2012. We are monitoring the situation and will provide a further update in due course."

India will be closely watching Cairn's response considering it has to pay $1.2 billion in arbitration award to company, which has threatened to confiscate overseas Indian assets to recover the amount.

The amendment to the Income-tax Act that nullifies retrospective taxation also proposes to refund any amount paid by entities against tax demand under this law, although without interest.

In 2014, India had sent a tax demand to Cairn Energy over capital gains from an internal reorganisation in Cairn India. In 2015, Cairn moved international arbitration tribunal to challenge the retrospective tax demand.

In December 2020, the tribunal ruled in favour of Cairn Energy, asking New Delhi to pay $1.2 billion. Another $22.38 million has to be paid towards arbitration and legal costs. Following the ruling, the company had been identifying Indian assets abroad to enforce the arbitration, including aircraft, ships and bank accounts.

Cairn Energy had moved courts in several jurisdictions to register its claim on Indian assets, and has been successful in some places.

On Monday this week, Finance Ministry told Lok Sabha that it has not received any proposal from Cairn for settlement within the legal framework of the country.

On the question of whether the government had received a list of Indian public assets in countries where Cairn had registered the enforcement and is pursuing efforts to monetise the arbitration award, the ministry informed the house that no such list has been received.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Recommended For You
Edit Profile
Get alerts on WhatsApp
Set Preferences My ReadsFeedbackRedeem a Gift CardLogout