Vodafone tax row may end soon

VodafoneThe Central Board of Direct Taxes (CBDT) is reportedly preparing to propose the finance ministry to exempt companies trapped in the retrospective tax net from paying interest and penalties on outstanding tax liabilities.

A senior I-T official revealed that the CBDT was mulling over a plan to issue a circular to waive off interest and penalty on the pending tax liabilities of such companies.

The official said, “A proposal to this effect is likely to be taken to the finance minister for final clearance.”

CBDT, the apex tax body in the country, has the power to grant respite to a class of taxpayers under sub-section 2a and 2b of Section 119 of the I-T Act, and Section 234 B (d) that deals with waiver of interest.

The official’s comments surfaced a few days before the Parthasarthi Shome-headed panel, which scrutinized the retrospective tax amendments, will submit its report to Finance Minister P Chidambaram, who will take the final decision.

If the finance minister agrees to waive off interest and penalty on the pending taxes, one of the biggest beneficiaries will be UK-based Vodafone, which is liable to pay around Rs 20,000 crore in income tax with regard to its $11.2-billion acquisition of Hutchison Essar in 2007 via an overseas transaction. The total tax liability includes interest and penalty of Rs 8,000 crore.

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