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Vodafone files for retrospective tax refund with India: Report

Vodafone files for retrospective tax refund with India: Report

Vodafone files for retrospective tax refund with India: Report
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By CNBCTV18.COMDec 3, 2021 11:24:11 AM IST (Published)

Vodafone, also affected by the retrospective taxation rule by the Centre, filed an application with the Income Tax authorities to initiate settlement of their tax dispute. The application will now be processed and Form 2 will be issued to the company, which commits to a refund.

After Cairn Energy, Vodafone, also affected by the retrospective taxation rule by the Centre, filed an application with the Income Tax authorities to initiate settlement of their tax dispute. The company hopes to be indemnified against any future claims, Economic Times reported quoting a top government official.

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"They have applied,” the official told the newspaper, adding that the application will now be processed and Form 2 will be issued to the company.
The issuance of Form 2 signals the acceptance of the application and commits to refund the tax paid.
Unlike Cairn Energy, Vodafone’s application has been filed under a separate set of provisions under Section 119 of the Finance Act.
The Central Board of Direct Taxes had notified these rules in October as the Vodafone case was different from that of Cairn and other companies.
Tax demands from the telecom major were introduced under Section 119 in the Finance Act 2012, while for Cairn and the other firms, the government issued tax demands after the 2012 amendment under Section 9. Section 9 relates to the indirect transfer of Indian assets. With this in view, the finance ministry had notified a separate set of rules to settle the retrospective tax demand of Vodafone.
Vodafone will receive a refund of Rs 44.7 crore from the government that it had collected as tax.
Cairn Energy and other companies, also embroiled in the retrospective tax dispute, have already applied for settlement with the Income Tax department after the government issued the final rules under the Taxation Laws (Amendment) Act 2021. These companies have been issued Form 2, the official told Economic Times.
The I-T department had sought Rs 11,218 crore in taxes from Vodafone for acquiring a controlling stake in Hutch-Essar in 2007 through a deal in the Cayman Islands.
The Supreme Court had quashed the tax demand in 2012, but it was again revalidated through Section 119 in the Finance Act, 2012. The I-T department then sought a penalty of Rs 7,900 crore from Vodafone. In 2014, the telecom firm moved for arbitration under the India-Netherlands Bilateral Investment Promotion and Protection Agreement. The arbitration court held the retrospective tax legislation as a breach of the "guarantee of fair and equitable treatment".
Faced with challenges, the Centre finally scrapped the retrospective taxation by amending the Finance Act, 2012, and the Income Tax Act, 1961.
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