Practically official: Govt to demand Rs 20k cr from Voda

The government plans to slap a tax demand of about $3.75 billion (about Rs 20,000 crore) on Vodafone if Parliament approves a law to retroactively tax overseas deals that involve Indian assets, The Wall Street Journal said, quoting a senior government official_._

The demand will include basic tax of about $1.48 billion (Rs 7,800 crore), a penalty of a similar amount and interest charges of about $790 million, RS Gujral, secretary at the Department of Revenue in the Ministry of Finance, was quoted as saying.

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It’s the first time a government official has confirmed the figure, which has been talked about for a while.

The figure is nearly double the $2 billion tax that the government demanded earlier.

Early this year, the Supreme Court ruled that Vodafone was not liable to pay tax in its $11.2 billion overseas deal with Hutchison Whampoa, which allowed the British telecom giant to acquire the Indian assets of Hutchison Whampoa in 2007.

However, in March, finance minister Pranab Mukherjee introduced a proposal in the Finance Bill that would retrospectively tax such overseas transactions going all the way back to 1962. If passed by Parliament, it would over-ride the ruling, which is what Vodafone - and many experts - fear.

The Finance Bill was passed by the Lok Sabha on Tuesday, but still requires approval of the Rajya Sabha.