Union Cabinet to decide on Vodafone tax dispute
By insightVAS - Thu Feb 21, 3:16 pm
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The Vodafone tax dispute has made progress, as the Finance Minister P Chidambaram said that Union Cabinet will decide on the telecom giant’s offer to the government to begin conciliation proceedings. It is the first official hint to the British telecom giant that India government may settle the 14,000-tax dispute. The ministry has also sought attorney general’s opinion in a separate tax case involving Shell, the minister said.
“As far as Vodafone is concerned, they had written to us proposing conciliation. We have written back saying that yes your request will be considered by the competent authority. So, the matter will go to the cabinet,” Chidambaram said here.
The government is likely to amend the income tax law in the forthcoming budget to empower itself to reach out-of-court settlements in cases impacted by the retrospective amendment in the previous budget that made all overseas indirect transfers of Indian assets taxable here.
The Tax experts opined that a legal framework is needed to provide statutory backing for an out-of-court settlement with Vodafone and other companies involved in similar tax demands.
“You will need a mechanism within the law to forego a certain amount of levy or interest or penalty to give it a legal backing and also as the retrospective law impacts not just Vodafone but many other cases of indirect transfers as well,” said Sunil Jain, Partner, J Sagar Associates.
India is looking to resolve high profile tax disputes to send out strong signals to boost business confidence and assure international investors that the tax authorities are not persistent litigants.
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