Assistant Professor, Department of Commerce, Gargi College, University of Delhi, New Delhi, India
Online published on 23 December, 2013.
Perhaps, there can't be a law on taxation which is perfect, the review process of law is a continued and never ending process. That's why tax laws are subject to frequent amendments. Apart from this, if law exits, loopholes to avoid tax also exist. Efforts has been made to plug one more loophole by the Budget, 2013–2014 by inserting new provisions in Chapter XII-DA of the Income Tax Law fro taxing certain buy back transactions on a presumptive basis. The aim of this research article is to throw some light on the pros and cons of the new provisions. The research is exploratory in nature. The amendment has been analysed from various angles. The findings includes positive aspects of such tax which include not only the generation of extra revenues for the Government by the new tax as also simplicity in taxation of buy back transactions which are entered to avoid tax. The findings do include negative aspects of such tax which include for instance taxation of genuine buy back transactions, being a presumptive tax which itself has been a subject of debate over decades, many unresolved issues which need to be addressed in order to implement the new provisions in letter and spirit, practical difficulties in calculations of the tax base for such tax on buy back in certain cases, and so on. All these and several other issues need to be addressed on an urgent basis to implement the new provisions has been detailed in this article.
