Govt considers amicable solution to Vodafone case

New Delhi: The government today said it is considering the request of British telecom major Vodafone for amicable settlement of the over Rs 11,217 crore tax dispute.

The Income Tax Department had issued a letter in January to Vodafone International Holdings BV (VIHBV) stating that the company is required to pay tax demand of Rs 112,17,94,68,800 along with interest. “Subsequently, VIHBV has made a request to settle the issue in amicable manner, which is under consideration,” Minister of State for Finance S S Palanimanickam informed the Lok Sabha in a written reply.

[caption id=“attachment_636241” align=“alignleft” width=“380”] The tax liability arose due to amending of the Income Tax Act, 1961. Reuters[/caption]

Finance Minister P Chidambaram had yesterday said that the Cabinet is likely to take a view on the Vodafone tax case next week. Vodafone is facing the tax liability for purchase of Hong kong-based Hutchison Whampoa’s stake in Indian telecom business Hutchison Essar in 2007.

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The tax liability arose due to amending of the Income Tax Act, 1961 with retrospective effect during the tenure of the then Finance Minister Pranab Mukherjee to undo the Supreme Court judgement that was ruled in favour of Vodafone.

Recommendations of the Shome panel on retrospective amendments to tax laws are under consideration of the

government. Among other things, the panel had suggested that either the government withdraw the retrospective tax amendment or waive interest and penalty in case it had to recover the taxes.

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Replying to another question, Palanimanickam said investigations on allegations of evasion of tax against “a manufacturer of mobile handsets in India” is in progress. He, however did not provide details saying “since the investigation is in progress, it is premature to conclude on the fact of evasion and to quantify it”.

PTI