We are writing to you to highlight certain serious concerns being faced by taxpayers regarding Rule 11UAE introduced by Notification No. 68/2021 dated 24 May 2021.
Please find attached a detailed representation that explains the unintended impact of the new Rule 11UAE and the consequent hardships being faced by the taxpayers. The new Rule results in a capital gains liability that is based on a higher notional value as against the actual lump-sum cash consideration. This is despite the fact that the deal was publicly announced, much prior to the notification of Rule 11UAE. The deal was with unrelated party at commercially negotiated value supported by independent valuers and approved by all stakeholders. The provisions also do not provide any opportunity to the taxpayer to rebut the normative valuation.
It is requested that :
· Relief may be granted from retrospective application of Rule 11UAE for transactions which were publicly announced before 24 May 2021 but are consummated after 24 May 2021; and
· An opportunity may be provided to the taxpayer to rebut normative FMV as per Rule 11UAE.
We believe the above would create conducive business atmosphere by mitigating unintended hardships to taxpayer and foster the government’s agenda of ‘Tax Certainty’ and ‘Ease of Doing Business’.
We have also attached herewith the copy of earlier representation filed on June 18, 2021, for your ready refer