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Retro tax law: What were the liabilities of Vodafone, Cairn Energy

The government’s proposal to scrap retrospective taxes is said to have a direct bearing on long-running tax disputes with Cairn Energy Plc and Vodafone Group.
It also proposed to nullify tax on indirect transfer of Indian assets before May 2012, on fulfillment of specified conditions, and repay the principle amount without interest thereon.
The proposed amendment comes after a French tribunal last month ordered a freeze on some 20 centrally located properties belonging to the Indian government as part of a guarantee of the amount owed to Cairn.
While the Centre’s liability in the Vodafone case is not too significant, it has to refund $1.2 billion to Cairn Energy for the shares of the company it had sold, tax refund withheld and dividends confiscated.

As many as 17 entities stand to benefit from the proposed tax amendment, the government said in Parliament. About Rs 1.10 lakh crore in back taxes was sought from 17 entities that were levied taxes using the 2012 legislation. Of these, major recoveries were made only from Cairn.
Centre said that it will refund about Rs 8,100 crore collected to enforce such levies. Of this, Rs 7,900 crore was from Cairn Energy alone.

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