Vodafone and Cairn Energy, which are engaged in legal tussles with the government over payment of retrospective taxes, could just put an end to the dispute by paying the principal amount without the interest and penalty.
“A separate dispute resolution mechanism has been proposed for all retrospective tax cases. If the companies agree to withdraw the litigation including international arbitration under any treaty, they can simply pay the principal amount and the entire interest and penalty can be waived. There are two cases of this nature — Cairn and Vodafone. I hope they will take advance of this scheme and government has taken a step forward. This is the best we can do for you,” revenue secretary Hasmukh Adhia said after the Union Budget was unveiled.
The Finance Bill contains a provision to bring changes in the retrospective tax disputes and would be notified, he said, adding that the companies will have to pay the principal amount within 60 days after the commissioner accepting the declaration from the firms.
Recently, India’s tax department has slapped a notice on Vodafone International Holdings, seeking Rs 14,200 crore in taxes and threatening to seize its assets if the demand is not met. The telecom giant has a principal tax demand of around R8,000 crore. Similarly, Cairn UK Holdings had received a draft income reassessment order of Rs 20,494 crore (principal amount is nearly R10,000 crore) pertaining to the transfer of its Indian assets to Cairn India.
Domestic manufacturing: There are number of measures to promote growth and employment. This is sought to be done by two things – first promoting domestic manufacturing and housing activity. As far as promoting the domestic manufacturing is concerned – it will be done in two ways – first direct taxes in which the corporate income tax is levied for new manufacturing units is straight away brought to 25%. Second, duty changes which would be in basic customs duty and CVD. After this, the domestic industry would be competitive vis-à-vis global industry when it comes to duty structure.