Vodafone trying for reconciliation on tax issue

29 May 2013

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Vodafone India, the Indian subsidiary of British telecom major Vodafone Plc, is trying for reconciliation with the government over the tax issue, an official of the telecom giant said today after a meeting with finance minister P Chidambaram.

Vodafone India non-executive chairman Analjit Singh today also met senior finance ministry officials on the Rs11,217 crore tax liability issue related to the British firm's acquisition of Indian telecom assets of Hutchison Whampoa.

"We have said consistently, we are ready to resolve the Vodafone tax dispute," Singh said . He, however, did not provide any details as to when and how it would resolve the tax liability.

He said: "No nitty-gritty has been discussed since our last meeting with the government."

"We just cannot look at one aspect of the matter. We have to look at the whole matter," Singh said.

The law ministry had, earlier this year, rejected a finance ministry's proposal for conciliation with Vodafone, saying said it was illegal.

Vodafone is facing the tax liability for the purchase of Hong Kong-based Hutchison Whampoa's telecom business, which involved stake in its Indian venture, Hutchison Essar, in 2007.

Vodafone had won a tax case in the Supreme Court of India, during the tenure of Pranab Mukherjee as the finance minister, but the government amended the Income-Tax Act with retrospective effect to undo the ruling.

The income tax department had issued a letter to Vodafone International Holdings BV in January, stating that the company is required to pay tax demand of about Rs11,217 crore along with interest. But Vodafone replied that it does not owe anything to the Indian government.

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

Recently, Finance Minister P Chidambaram had said the Union Cabinet will take a final call on settlement of the Vodafone tax case.

According to sources, the Cabinet will take a view on the offer of conciliation on June 4.

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