Finance Minister P Chidambaram has exuded confidence that the Rs.11,200-crore Vodafone tax dispute will be resolved within a month.

“They (Vodafone representatives) are being invited to a third round of discussions this week....they (the Central Board of Direct Taxes) expect them to come any time this week and I am looking forward to a resolution of the Vodafone issue. And I’m confident we will resolve that issue,” he told the Financial Times in an interview.

When asked whether the issue would be resolved in the next month or so, the Minister said, “I am trying to resolve it even sooner than that.’’

British telecom major Vodafone was slapped with an income tax demand notice of Rs.11,200 crore on its 2007 acquisition of Hong Kong-based Hutchison Whampoa’s stake in its Indian telecom business. The liability arose following the then Finance Minister Pranab Mukherjee amending the Income Tax Act, 1961, with retrospective effect to undo the Supreme Court judgment that had ruled in favour of the company.

Mr. Chidambaram said he was “happy that Vodafone has formally written to the government offering to engage senior government officials to find a way out of the problem. They have held two rounds of discussions with my Revenue Secretary and the Chairman of the CBDT.’’

The Minister said he was confident about resolution of the dispute soon because “for the first time, Vodafone has offered to engage the government in a discussion to find a solution rather than persist with its Notice of Arbitration.’’

The Indian government is working towards a solution based on recommendations of the Shome panel, which suggested that either the government should withdraw the retrospective tax amendment or waive the penalty in case it had to recover the taxes.

Withdraw spectrum guidelines

Meanwhile, Vodafone India has sought withdrawal of the recently issued guidelines for the second round of spectrum auction, terming them “illegal, discriminatory and benefiting one set of players“.

Vodafone said the guidelines were “discriminatory” in nature, as they fix the reserve price of 900Mhz at three times the price of 800Mhz, while The Telecom Regulatory Authority of India (TRAI) had recommended both these bands to be treated on a par.

“Fixing reserve price of 800 MHz band at comparatively low levels benefits a certain set of telecom operators,’’ it said in a letter to Telecom Secretary R. Chandrashekhar, while seeking withdrawal of the guidelines.

Vodafone also said auction of 900MHz spectrum included the spectrum which was now being used by the company for Mumbai, Delhi and Kolkata circles and since the same spectrum was already being used in its networks, it could not be put out for auction.

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