retro tax: New rules for Vodafone retrospective tax settlement notified


India Thursday notified fresh rules to facilitate settlement of the retrospective tax dispute with British telecom company Vodafone.

The Central Board of Direct Taxes notified ‘ Relaxation of Validation( section 119 of the finance act) Rules prescribing the forms and conditions for the declaration to be filed by the company for setting its case.

Vodafone’s tax demand in the tax dispute was validated under section 119, as distinct from the others and therefore a separate set of rules had to be notified. Conditions, prescribed under these rules, are akin to the ones issues earlier.

The company will have 45 days to file its application to settle its tax dispute.

New Delhi had challenged a verdict by the Permanent Court of Arbitration at The Hague in September 2020 in favour of Vodafone that ruled the company was entitled to the protection of its investments under the treaty and asked India to cease such breaches of the international treaty.

The tribunal directed India to reimburse £4.3 million along with €3,000 as legal costs. The government’s liability totalled Rs 85 crore, of which Rs 45 crore collected toward the tax levy was to be refunded.

As per the retro repeal law, any company settling the case would only be eligible for tax paid by it.

Case File

Vodafone had acquired a controlling stake in Hutchison Essar in 2007 in an $11.2 billion deal executed overseas. India’s tax department said that Vodafone should have withheld tax on the deal and issued a notice seeking Rs 11,218 crore, later augmented by Rs 7,900 crore in penalties.

In 2012, the government retrospectively amended the income tax law to tax offshore deals involving the transfer of Indian assets after the Supreme Court ruled in favour of Vodafone.

Vodafone sought arbitration under the India-Netherlands Bilateral Investment Promotion and Protection Agreement (BIPA) in 2014. The Permanent Court of Arbitration held that the retrospective legislation was in breach of the “guarantee of fair and equitable treatment.

Read original article here

Denial of responsibility! Verve Times is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – [email protected]. The content will be deleted within 24 hours.

Leave a comment