India is in talks with Vodafone Group Plc and Cairn Energy Plc to settle long-running tax disputes with them, a top government official told Bloomberg. It comes after Finance Minister Nirmala Sitharaman last week tabled a bill in the Lok Sabha to nullify the tax claims raised based on retrospective use of an anti-evasion tax law amendment introduced in 2012.
“Some informal discussions are going on,” Revenue Secretary Tarun Bajaj, Revenue Secretary proclaimed in an interview with Bloomberg Television on Monday. “I would not like to discuss them in the public domain, but overall the answer to your question is, yes,” he said in reply to whether the companies wanted to drop the cases in international tribunals.
Letting go of pending litigation or renouncing any interest or costs is the primary step for companies to get qualified for exemption from the tax rule, established in 2012 which allowed officials to follow M&A deals in 1962 in case if the underlying asset was in India. Apart from choosing an opening room to soothe conflicts with Vodafone and Cairn, this move aids to facilitate the economy’s recovery by involving investment.
“We have not been influenced by arbitration matters which are going on in various courts,” Tarun Bajaj averred. “We want to give stability and certainty on taxation rates to foreign investors.”
Vodafone Idea Ltd., a conglomerate between the Vodafone Group and Indian billionaire Kumar Mangalam Birla, still faces billions of dollars as a fee charged to the government. The company faced a drawback where the top court of India rejected petitions by telecom operators to reallocate their dues.
“It would make no sense for the government to come and say that we give this relief and companies say that it is not enough,” said Bajaj in a note. “ I am sure the government will find a solution.”
“If the economy does well, revenues automatically do well. But it’s not something that I don’t want to give up revenues. If it helps the economy I am OK to give up revenues,” Bajaj added.
This Friday, the Lok Sabha passed the Taxation Laws (Amendment) Bill of 2021, which will ascertain to settle conflicts with Cairn Energy Plc, Vodafone Group Plc along with 15 other companies over some crucial retrospective tax demands initiated by the Union government.