There seems to be no end in sight for the long-standing Vodafone tax issue.
In January this year, the Supreme Court had passed a ruling which exempted Vodafone from paying $2.3 billion as capital gains tax on a transaction in 2007. Through this deal, which was signed outside the country, Vodafone acquired 67 per cent stake in Indian telecom company Hutchison Essar from Hong Kong-based Hutchison Whampoa.
Soon thereafter, while presenting the Union Budget 2012-13, Finance Minister Pranab Mukherjee proposed to retrospectively amend the Income Tax Act with effect from April 1962 in order to levy tax on cross-border deals involving overseas companies for assets based in India.
This move, deemed to be aimed at Vodafone India, stirred up a hornet?s nest and, recently, the company sent the government an arbitration notice under the India-Netherlands bilateral investment protection agreement.
Currently, as per news reports, the inter-ministerial panel established to file a reply to Vodafone India?s notice issued in this context has decided against promising any relief to the operator.
The final call on the notice will be taken by the Prime Minister?s office.
