Cos must indemnify govt; wait 5 mnths to get refund

‘Companies concerned will irrevocably withdraw, discontinue and not pursue any lawsuits, arbitration, conciliation or mediation either in India or abroad’

NEW DELHI: Companies such as Cairn Energy Plc and Vodafone Group of the UK will have to indemnify the Indian government against future claims in order to settle their retrospective tax cases, according to rules notified by the government to settle disputes arising from seeking back taxes.

The Ministry of Finance on October 1 notified rules that when adhered to will lead to the government withdrawing tax demands raised using the 2012 retrospective tax law and any tax collected in the enforcement of such demand is paid back.

But the repayment, going by the timelines drawn in the rules, will take a minimum of 2-3 months.

According to the rules, the companies will have to withdraw any pending litigation or proceeding before any forum against the levy of the retrospective tax and also give an assurance that they won't pursue any further claims in the future.

In addition, the companies and any other interested party will have to furnish an indemnity bond committing not to seek damage from the Indian government or its affiliates.

Companies will have to file a declaration with the income tax authorities along with a board resolution or legal authorisation besides an indemnity bond, the rules said.