Vodafone seeks clubbing of all tax claims in India
03 Jan 2014
British telecom firm Vodafone has submitted its response to the finance ministry's offer of a non-binding conciliation to resolve a tax dispute, has suggested a clubbing of all tax claims against the company for a settlement.
The total tax claims against Vodafone in India, which included Rs11,2000 crore by way of capital gains tax and Rs3,700 crore in the transfer pricing of its BPO sold to a Mauritius firm, comes to nearly R15,000 crore.
Responding to the finance ministry's offer for conciliation, Vodafone has suggested that the transfer pricing case before the Income Tax Appellate Tribunal (ITAT) be clubbed with the Rs11,200 crore capital gains tax dispute, sources said.
The union cabinet had, meanwhile, approved the finance minister's proposal for a non-binding conciliation with Vodafone in June last year. The conciliation, however, would ultimately require Parliament's approval and an amendment to the I-T Act.
"Vodafone is likely to meet finance ministry officials this month,'' the sources said, adding, ''They have said they are keen on further conciliation talks."
The ITAT last week stayed a Rs3,700-pcrore tax claim by the income tax department on Vodafone India in a transfer-pricing dispute but asked the company to deposit Rs200 crore as initial payment and submit bank guarantees for the remaining amount.
The Rs11,200-crore tax dispute relates to Vodafone's 2007 acquisition of Hutchison Whampoa's stake in Hutchison Essar.
The transfer-pricing case concerns Vodafone's issue of shares in its Pune-based BPO arm Vodafone India Services to Vodafone Teleservices Mauritius for Rs246.38 crore in FY08, which, according to the I-T department, was grossly undervalued.
The conciliation, however, would be under the Indian arbitration law and not under the United Nations Commission on International Trade Law (UNCITRAL) as sought by Vodafone.
No time frame has been set to conclude the proceedings.
The Supreme Court had ruled in Vodafone's favour in 2012, saying it was not liable to pay any tax over the acquisition of assets in India from Hong Kong-based Hutchison.
The government, later in 2012, changed the rules to enable it to make retrospective tax claims on concluded deals.
Vodafone, which recently announced the acquisition of 100 per cent stake in its Indian operations, is now looking for an early resolution of all tax disputes in India.
The Foreign Investment Promotion Board had, on 30 December, cleared Vodafone's Rs10,141 crore plan to buy out minority shareholders in its India arm.
