Centre trying to resolve Vodafone tax issue: Prasad

Amid a controversy over Rs.14,200 crore tax reminder notice to Vodafone for an issue under arbitration, Telecom Minister Ravi Shankar Prasad on Monday said the government was trying to resolve the issue.

“When an Indian company goes to England, it pays taxes. Pharma companies pay taxes in the US. The Prime Minister has said taxes cannot be levied on retrospective basis. But tax liability issue still remains. They are saying the case is in arbitration. We are trying to find a way to resolve this issue,” he said at an Aaj Tak event. He added that it was not right to gauge the country’s economic capability by limiting it to the Vodafone case.On February 4, the I-T Department issued Vodafone a reminder over its Rs.14,200-crore tax demand and threatened to seize assets in the case of non-payment.The notice, sent to Vodafone International Holdings BV, said the dues are in relation to its $11 billion acquisition of Hutchison Whampoa’s India telecom business in 2007.

The British telecom major has disputed the tax demand over its acquisition of 67 per cent stake in Hutchison, now called Vodafone India, arguing that no tax was due as the transaction was conducted offshore.

But the tax department’s contention is that capital gains were made on assets in India. The issue is under international arbitration.

Vodafone strongly reacted to the tax reminder saying it represented “a complete disconnect between the government and the tax department” and ran contrary to Prime Minister Narendra Modi’s promise of tax-friendly environment for foreign investors.

“The Indian government stated in 2014 that existing tax disputes, including ours, would be resolved through the existing judicial process,” Vodafone had said.The government had defended the reminder notice as “a routine exercise of sending collection notice to all those whose dues are not stayed by any Court.”

“The party (Vodafone) can always approach assessing officer with a request to stay the demand as per law. In case assessing officer does not agree, party can go to next higher authority and get a stay,” Revenue Secretary Hasmukh Adhia had said. — PTI

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