India has set up a high-level panel of senior income tax officials to scrutinize all cases of indirect transfers prior to April 2012, when the 60-year-old law was retrospectively amended to tax overseas transactions, and decide them in a time-bound manner as the new government looks to create a non-adversarial and predictable tax regime for investors.

The Central Board of Direct Taxes, the apex direct taxes body under the finance ministry, set up a four-member committee headed by a joint secretary that will decide on such cases within 60 days of receiving them from the assessing officer.

Finance minister Arun Jaitley had promised to create the mechanism in his budget speech.

It will be incumbent upon the assessing officer (AO) to approach the committee when faced with an IT case from before April 2012. Only those cases can be referred to the panel where no proceeding of assessment or reassessment, no notice for proposed assessment or reassessment and no proceeding under Section 201 is pending.

CBDT sets up high-level committee to decide retro tax casesAn AO shall seek prior approval of the panel when faced with a situation that any income is deemed to accrue or arise in India before April 2012 through transfer of a capital asset situated in India following amendments introduced with retrospective effect. The committee will examine the AO's proposed action and after providing an opportunity to the assessee take an appropriate decision, as per the terms of reference laid down for the panel. "The committee shall convey its decision in writing to the assessing officer with copy to the principal commissioner or the commissioner concerned and the assessee," noted the CBDT notification issued on Thursday.

The AO will proceed in accordance with directions of the committee, adding that the board "may intervene" in the working or deliberations of the committee, as and when required. The panel will have to give its first report in respect of the period ending December 2014 and subsequent reports shall be submitted on a half-yearly basis (June 30 and December 31 every year). The UPA government had amended the Income Tax Act, 1961, in 2012 budget retrospectively from its conception year, allowing authorities to tax overseas transactions involving indirect transfers of Indian assets.

The new government is keen to send out positive signals to investors as it seeks to lift growth that touched decadal lows in 2012-13 and 2013-14.

Jaitley did not undo the amendment but promised to create this mechanism to prevent harassment of taxpayers.