Finance Minister P Chidambaram on Saturday said the government will amend the Income Tax Act once the over Rs 11,200 tax dispute with Vodafone is resolved.
The Minister said, however, that such an amendment was unlikely in the ongoing Budget Session.
“An amendment to the I-T act is necessary. The question is when do you move the amendment?
“My proposal is let’s find a possible solution to the Vodafone dispute and then go to Parliament with the amendment saying this is the possible solution that we have been able to arrive at tentatively. Please amend the Act so that we can implement it,” he told reporters here.
Although the British telecom giant had won a tax case in the Supreme Court, the government had amended the Income-tax Act with retrospective effect to undo the ruling.
Following that, the Income Tax Department 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, Vodafone replied saying that they do not owe anything to the Indian government.
Vodafone earlier wanted to take India to international arbitration but later offered conciliation on the issue. The Union Cabinet will take a view on the offer of conciliation.
Mr Chidambaram said: “Once the comments are received on the Cabinet note, it will go to Cabinet.”
Vodafone is facing the tax liability for purchase of Hong Kong-based Hutchison Whampoa’s telecom business which involved stake in its Indian venture, Hutchison Essar, in 2007.