Finance Minister Pranabh Mukherjee’s Finance Bill termed as the biggest hurdle for Vodafone, British telecom giant as Rs 20,000 crore tax demand notice issued to the company under its retrospective tax law amendment.
Strongly opposing the govt.’s move, Vodafone today said, it was disappointed with move, unjustified and will take all possible steps to safeguard its shareholders’ interests.
“We are naturally disappointed that, despite very widespread concern in India and internationally, the government has not seen fit to propose amendments to address the uncertainty caused by retrospective tax legislation,” the company said in a statement.
It said, “We are studying the legislation as amended, and will take all possible steps to safeguard our shareholders’ interests.”
Presently, British company, dealing with Rs 50,000 crore stakes of investment over its Indian business, is one of the larger around Rs 29,000 crore Indian taxpayers.
Being disappointed from the amends proposal, Vodafone claimed, “To underline our commitment for the long term, despite making considerable investments over the past five years, Vodafone has yet to take a single rupee out of the country.”
Financial Bill that approved in Lok Sabha has endorsed retrospectively tax amendments based the Income Tax Act from 1962 in a bid to tax overseas acquisitions involving interests or assets in India. Under which Vodafone faces a tax demand of Rs 11,000 crore plus interest and a penalty on its 2007 acquisition of Hutchison Whampoa Ltd’s Indian operations.
As per revising amendments proposal, Vodafone, which had paid $10.7 billion in 2007 to buy Hutchison’s stake, would have to pay Rs 7,900 crore as capital gains “as an agent” of Hutch, another Rs 7,900 crore as penalty and interest, according to I-T department.
Earlier in January, Rs 11,200 crore tax row had won by the company while the Supreme Court favored inside of it and ruled it was not liable to pay any taxes under prevailing laws.
Beside this, while presenting Financial Bill, Mukherjee clearly stated that the retrospective provision for tax proposal was not revised to allow international merged authorities to tax older corporate deals.
“There cannot be a situation that somebody will make money on an asset located in India and will not pay tax either in India or to the country of its origin,” Mukherjee said in a statement.
