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Cabinet to take call on Vodafone's conciliation offer: FM

Last Updated: Thursday, February 28, 2013 - 22:06

New Delhi: Finance Minister P Chidambaram Thursday said Cabinet will take a view on offer of conciliation proposed by British telecom firm Vodafone in the Rs 11,217 crore tax dispute case.

The Income Tax Department had issued a letter in January to Vodafone International Holdings BV stating that the company is required to pay tax demand of about Rs 11,217 crore along with interest.

However, Vodfone replied back saying that they do not owe anything to the Indian government.

Addressing a post-Budget press conference, Chidambaram said Vodafone earlier wanted to take India into international arbitration.

"Since than we had discussions. Vodafone has now offered conciliation...That matter will go to the Cabinet. If the Cabinet accepts the offer of conciliation, the matter will go to conciliation, conciliation as different from arbitration," he said, adding, conciliation is not binding.

"By conciliation, a conciliator can suggest a way forward and both sides have to accept it before there can be a solution. The two sides may agree, may not agree," he said.

Vodafone is facing the tax liability for purchase of Hongkong based Hutchison Whampoa's stake in Indian telecom business Hutchison Essar in 2007.

On the retrospective tax introduced through last Budget, Chidambaram said the government was examining recommendations of the Parthasarthi Shome committee on the issue.

He said the panel has suggested that "if it becomes necessary" for government to make a retrospective law, in such a case government should only collect the tax and not the penalty and interest.

"That recommendation is under consideration," the Finance Minister said.

The amendment to Income Tax Act, 1961 with retrospective effect has been passed by Parliament.

Chidambaram further said on taxation issues government was very transparent and does not make any "pre-judgement" about tax liabilities of assesses.

Citing the case of Anglo-Dutch oil major Royal Dutch Shell Plc's India unit, he said that the tax liability issue was referred by the Finance Ministry to Attorney General on its own to interpret a particular section of the I-T Act.

"Now what more can be transparent and non-discriminatory ...I think we are going about it without any bias, without any preference, in a very transparent manner. We are not making any pre-judgement about tax liabilities," he added.

Shell India has described as "absurd" the demand for USD 1 billion in taxes on a USD 160 million equity infusion done by the oil major four years ago. The issue relates to transfer pricing mechanism.

Replying to another query on proposed 10 percent surcharge on people with income of over Rs 1 crore, the Minister said the burden has been put only on 42,800 assesses and that too for only one year.

He replied in the negative when asked if surcharge proposed on companies will lead to tax evasion.

The Minister said the surcharge has been suggested as there were pressures on revenue collection.


First Published: Thursday, February 28, 2013 - 22:06
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