Telecom

Vodafone Group to settle retro tax case with India

Vodafone Group has confirmed that it has applied to settle the retrospective tax dispute with the Indian government under the new legislation, which will see the British telecom major withdraw international arbitration case against India.

In turn, it will get a refund of Rs 44 crore collected as taxes previously.

India had appealed against the verdict of an international arbitration tribunal in Singapore in December to set aside the award on jurisdictional grounds.

As per the award, the government has to reimburse Vodafone 60 percent of its legal costs and half of the 6,000-euros cost borne by Vodafone for appointing an arbitrator on the panel, which stands at around Rs 85 crore.

“We are expecting Vodafone and others to come forward for settlement under the Taxation Amendment Act.,” said a government official.

Under the Act, Vodafone will have to indemnify the Indian government against future claims to settle their retrospective tax cases, according to rules notified by the government in October to settle disputes arising from seeking back taxes.

Under the Act, Vodafone will have to indemnify the Indian government against future claims to settle their retrospective tax cases, according to rules notified by the government in October to settle disputes arising from seeking back taxes.

India lost the arbitration to the British telecom major over a 2012 legislation that gave government powers to retrospectively tax deals like Vodafone’s acquisition of 67 percent stake owned by Hutchison Whampoa in 2007. It had challenged that tax demand of Rs 22,100 crore, including interest and penalty under the Netherlands-India Bilateral Investment Treaty (BIT).

The Ministry of Finance in October had notified the new Relaxation of Validation Rules to settle the Vodafone retro tax case. While the telecom major had faced validation of tax demand under Section 119 introduced in the Finance Act 2012.