InvestorQ : Do you think that India should file a case against the orders issued in the Vodafone and Cairn tax cases? Does India have a strong case to fight?
Archita Jajjoo made post

Do you think that India should file a case against the orders issued in the Vodafone and Cairn tax cases? Does India have a strong case to fight?

Answer
image
Niti Shenoi answered.
3 months ago
Follow

Let us first look at what both orders in the case of Cairn and Vodafone state. In the Vodafone case, the IAT asked the Indian government to pay damages to Vodafone for the legal delays created. The logic was that the entire concept of retrospective taxation was against the spirit of the bilateral treaty that India and the UK had signed with one another.

IAT also ruled in favour of Cairn Energy. As India had held back dividends and tax refunds to Cairn, IAT asked India to pay these monies to Cairn with interest. In both the cases, the IAT has given India 90 days to appeal against the order. India has already appealed in Vodafone case and has declared its intent to file an appeal in the Cairn verdict too.

The stand taken by India is justified. There is no justification to allow global companies to do mega deals in India and make billion dollar gains without paying tax. Wal-Mart has paid tax on its Flipkart deal so even Cairn and Vodafone should pay on the billions made by them. Even Singapore attracted foreign investments with strong regulations only.

That is the model for India to follow. India must aggressively appeal against both the Cairn and Vodafone IAT rulings and they have done the right thing. It is time to set a precedent that investors cannot come into India and do big deals and also save on capital gains tax. That is not the way to attract foreign investments into India!

0 Views