Vodafone faces Rs20,000 cr tax; calls it 'grossly unjust'
10 May 2012
Vodafone Plc, facing a tax demand of Rs20 crore over its 2007 buy-out of Hutchinson Whampoa's stake in what was then Hutchinson Essar, on Wednesday called the move to change tax laws retrospectively "grossly unjust" and said it will take all possible steps to safeguard its shareholders' interest.
A day after the Lok Sabha passed the finance bill, finance secretary R S Gujral said in an interview to a television channel that the tax department will make a claim of over Rs20,000 crore. The income tax department has maintained that it would have to pay Rs7,900 crore as capital gains "as an agent" of Hutch.
In addition, Gujral said the company will have to pay another Rs7,900 crore as penalty and interest, which at that time had been computed at Rs4,300 crore.
"We are naturally disappointed that, despite very widespread concern in India and internationally, the government has not seen fit to propose amendments to address the uncertainty caused by retrospective tax legislation," Vodafone said in a statement.
Vodafone, which had paid $10.7 billion in 2007 to buy Hutchison's stake, said it would be grossly unjust if the company is charged tax "on a gain made by someone else".
"We are studying the legislation as amended, and will take all possible steps to safeguard our shareholders' interests," it said.