Cabinet to decide on Vodafone tax dispute

The union cabinet will take a final decision on the settlement of the Rs11,200-crore Vodafone tax issue after seeking opinion of the attorney general, finance minister P Chidambaram said today.

The move comes after Vodafone sought conciliation in the tax dispute with not much support coming from the UK government for the London-listed telecom major.

"As far as Vodafone is concerned, they had written to us proposing conciliation. We have written back saying ''yes'' your request will be considered by the competent authority. So the matter will go to the cabinet," Chidambaram said.

While the retrospective amendment to taxation proposed in the finance bill last year will not be taken back, the government is expected to relax interest and penalty demand on Vodafone, reports quoting official sources said.

Chidambaram had, early this year, announced that the government would delay implementation of controversial rules on tax avoidance, GAAR, by two years to 2016.

While this was seen as a move partly to help solve the dispute with Vodafone, tax authorities have recently unearthed similar tax avoidances by other MNCs such as Shell and Nokia.

The finance ministry, meanwhile, sent reminders to Vodafone in January for payment of the tax dues.