Partial tax waiver? Vodafone issue may be raised before cabinet next week

New Delhi: The government is likely to take aview on the Rs 11,217-crore Vodafone tax case next week, a topFinance Ministry official has said.

“The issue (Vodafone tax dispute) may come before theCabinet next week,” the official said.

The Law Ministry recently gave its go-ahead for aconciliatory out-of-court settlement of the tax dispute withBritish telecom major Vodafone.

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After presenting the Budget 2013-14, Finance Minister PChidambaram had said: “We have decided the appropriate time togo to Parliament would be after we have been able to resolvethe Vodafone case.

“As far as Vodafone is concerned, they had written to usproposing conciliation. We have written back saying that yes

your request will be considered by the competent authority.So, the matter will go to the Cabinet.”

Vodafone is facing the tax liability of over Rs 11,217crore for purchase of Hong Kong-based Hutchison Whampoa’s

stake in Indian telecom business Hutchison Essar in 2007.

Although the UK-based giant had won the tax case in theSupreme Court (January 2012), the government had amended theIncome-tax Act, 1961 with retrospective effect to undo theruling.

Following that, the Income Tax Department had issued aletter in January to Vodafone International Holdings BV

stating that the company is required to pay tax demand of about Rs 11,217 crore along with interest.

However, Vodafone replied back saying that they do not oweanything to the Indian government.

Vodafone earlier wanted to take India to internationalarbitration but later offered conciliation on the issue.

The government is working towards a solution based onrecommendations of the Parthasarathi Shome panel which

suggested that either government withdraw the retrospectivetax amendment or waive interest and penalty in case it had torecover the taxes.

PTI