InvestorQ : What is the final decision on settling tax disputes of Cairn, Vodafone etc?
Juvina Maggie made post

What is the final decision on settling tax disputes of Cairn, Vodafone etc?

Answer
image
Deepa Salunkhe answered.
2 months ago
Follow

The centre has just notified ground rules for such tax dispute settlement in 17 such cases with the most prominent among them being Cairn and Vodafone. Both the cases involved the use of an anti-abuse provision introduced in the Union Budget 2012 in retrospective taxation. The decision had been taken when the spat with Cairn was getting ugly with Cairn even threatening to attach assets of Air India as a proxy for the Indian government.

Under the government rules, the businesses will have to meet conditions like withdrawal of appeals and arbitration as well as waiving rights to pursue claims and remedies. In exchange, the Income Tax department will drop demands or claims raised in these cases. The Tax Department will also refund any amounts collected subject to the companies meeting conditions but no interest will be paid on any amount as part of settlement.

Cairn UK has been to get the money of $1.2 billion that the Indian government had held back in the past. Such amounts will be paid without interest and subject to the other party meeting the conditions including undertaking on waiver of future legal remedies in these cases. Cairn UK plans to pay out nearly 70% of the amount so refunded by the Indian government as dividend to its shareholders.

5 Views