Vodafone retro tax case: Govt notifies rules to settle dispute

Vodafone India

Vodafone India

The authorities have notified a clean set of policies to facilitate agreement of the retrospective tax dispute with British telecom large Vodafone Plc. The Central Board of Direct Taxes on October thirteen notified ‘Relaxation of Validation (Section 119 of the Finance Act, 2012) Rules, 2021’, prescribing the bureaucracy and situations for the statement to be filed with the aid of using the business enterprise for settling its case.

After enacting a regulation to scrap any tax call for levied on agencies the use of the debatable 2012 modification to the Income Tax Act, the authorities on October 2 notified guidelines for settling such cases. The authorities have promised to refund any tax accumulated by the use of such regulation however with no hobby and problem to agencies agreeing to withdraw all pending felony court cases. 

Under the guidelines notified, agencies are required to grant an assertion to the I-T branch chickening out all felony lawsuits towards the authorities over the levy of retrospective taxes. They also are required to indemnify the authorities towards any destiny claims and decide to now no longer search for any damage. The first set of guidelines launched in advance this month applies to businesses which include Cairn Energy Plc of the United Kingdom which have been slapped taxes after the 2012 modification. These taxes have sought the use of Section 9 of the 2012 regulation. 

The case touching on Vodafone is one of a kind as taxes had been sought from the business enterprise through validating an October 2010 order of the I-T branch that sought ₹11,218 crore in taxes from the British company over its 2007 acquisition of Hutch-Essar thru a deal withinside the Cayman Islands. The Supreme Court had in January 2012 quashed the tax call for however the equal turned into sought to be revalidated thru Section 119 withinside the Finance Act, 2012. 

After the notification of the guidelines, Vodafone can have forty five days to approach the authorities for an agreement. Vodafone had challenged the levy of such taxes after the 2012 rules at an global arbitration tribunal. The tribunal overturned any such levy and requested India to reimburse felony costs. The authorities’s legal responsibility totaled ₹85 crore, of which ₹45 crore accumulated closer to the tax levy changed into to be refunded. The authorities had challenged the arbitration award earlier than a Singapore court. 

In the case of Cairn, the authorities will must return ₹7,900 crore of taxes it had accumulated with the aid of using promoting the agency’s shares, withholding tax refunds, and confiscated dividend income. Vodafone had now no longer confronted any enforcement to gather the taxes sought from it.

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