Govt notifies rules to settle Vodafone retrospective tax case

Govt notifies rules to settle Vodafone retrospective tax case

The government has notified a fresh set of rules to facilitate settlement of the retrospective tax dispute with British telecom giant Vodafone Plc.

The Central Board of Direct Taxes on October 13 notified ‘Relaxation of Validation (Section 119 of the Finance Act, 2012) Rules, 2021’, prescribing the forms and conditions for the declaration to be filed by the company for settling its case.
After enacting a law to scrap any tax demand levied on companies using the controversial 2012 amendment to the Income Tax Act, the government on October 2 notified rules for settling such cases.

The government has promised to refund any tax collected using such law but without any interest and subject to companies agreeing to withdraw all pending legal proceedings.

Under the rules notified, companies are required to furnish a declaration to the I-T department withdrawing all legal proceedings against the government over the levy of retrospective taxes. They are also required to indemnify the government against any future claims and commit to not seek any damage.

The first set of rules released earlier this month applies to companies such as Cairn Energy Plc of the UK which were slapped taxes after the 2012 amendment. These taxes were sought using Section 9 of the 2012 law.

The case pertaining to Vodafone is different as taxes were sought from the company by validating an October 2010 order of the I-T department that sought Rs 11,218 crore in taxes from the British firm over its 2007 acquisition of Hutch-Essar through a deal in the Cayman Islands