Govt has assured us of a level-playing field, says Vodafone

New Delhi: Vodafone, which faces a possible tax on its 2008 deal, on Thursday said it has been assured of a “level playing field” by the government and asked to stay invested in the country.

Vodafone India Chairman Analjit Singh and a major shareholder in the British telecom company’s India arm, on Thursday met Planning Commission Deputy Chairman Montek Singh Ahluwalia for more than half an hour but said the tax issue was not discussed in the meeting.

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The meeting comes following exit of Pranab Mukherjee, who has rigorously pursued to tax Vodafone’s purchase of Hutchison stake in Hutchison Essar, from the Finance Ministry.

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“We came to meet Mr Ahluwalia. We did not discuss Vodafone tax issue as we did not want to embarrass him,” Analjit Singh said.

Besides retrospective tax, Vodafone like other old telecom operators may have to pay an auction discovered price for their existing licences if Department of Telecom’s proposal is accepted.

“But we were assured we would be given a level playing field and asked to continue on business in India including rural penetration,” he said. “Ahluwalia told us to get on with the business as India believes in reforms and FDI and there is nothing to worry.”

The telecom department has proposed four models to charge spectrum held by existing operators which include, charging all spectrum held by them or charging beyond 4.4 Megahertz spectrum that was allocated to players with their licences or charging beyond the contracted spectrum of 6.2 Mhz.

Vodafone, along with other old operators, holds more than 6.2 Mhz spectrum in some circles and the company may be hit if this proposal of DoT is accepted.

Vodafone has been struggling to resolve the tax issue in India. In January, it won a Rs 11,200-crore tax battle after the Supreme Court ruled the company was not liable to pay any taxes under prevailing laws.

Later, the government made changes in the Income Tax Act with retrospective effect to bring in tax net overseas deals involving Indian assets, like in the case of Vodafone-Hutchison deal carried out in Cayman Islands in 2007.

Following the amendments, Vodafone may be asked to pay a tax of Rs 11,000 crore plus interest and a penalty.

Later talking to reporters, Ahluwalia “What they (Analjit Singh) were saying to me…Vodafone remains very interested in investing in India and staying invested in India.” When reporters asked Analjit Singh about his views on Prime Minister Manmohan Singh taking charge of Finance Ministry, he said “We survive on hopes”.

PTI