In a blow to Vodafone, Supreme Court has refused to intervene in the tax case related to Hutchison/Essar stake case (Vodafone acquired 67% stake Hutchison Essar Ltd.)
Even if the company appeals against the tax demand with Commissioner Income Tax (Appeal) – the first appellate authority – Vodafone may have to pay half ($ 1 billion or Rs 4,900 crore) of the tax demand before the end of March. – source
The Contention
Vodafone acquired 67% stake in Hutchison Essar Ltd, India’s third largest mobile service provider, from Hong Kong-based Hutchison Telecommunications International (HTIL) in 2007.
- Vodafone acquired a company registered in Cayman Islands, a known tax-haven, for $11.2 billion. It contended that the transaction involved two overseas entities so the company was not liable to pay tax in India.
- As per tax department, the overseas transaction was related to assets acquired in India and hence, Vodafone should have deducted capital gains tax at source before paying HTIL.
- As Long term capital gains tax is levied at the rate of 20 %, Vodafone will have to shell out $1.7 billion as tax liability, a penalty of an equal amount and a tax on both sums at 18% per annum. The total outgo for Vodafone could exceed $4 billion.
Vodafone, even if it appeals against the decision will have to pay 50% of the amount (i.e. $1Bn) by March, 2009.
Expect a cascading effect of this matter on 3G auction as well.
that may be the reason, why making calls with vodafone is getting difficult day by day.. ISD calls are almost impossible..
and all the tax @ cost of survival of the company will go into the accounts of politicians’ beta and betis and in their marriages… the tax authorities are very clever. they will never clearly state the policy or structure of tax of what is excluded and what is not….n they will not reply to your questions also seeking clarity on interpretation of tax laws….
but once you complete the deal with some courage, they will dig their greedy teeth to an extent of breaking the backbone….what a shame! and look @ unaware citizens like ujjwal … who will live with it and look at only a narrow view.
I think you are totally wrong in this case its not correct to be a ctritc alwas.Vodafone case was classic example of tax avoidance by the company..
all the legal provisions are clear ..vfone tried to evade cap gain tax on the transaction by misinterpretinf the provisions..
it is the govt. to see that these type of incidence do not repeat…
and the govt did there part to book he culprit..
JUST GO THROUGH THE JUDGEMENT OF THE BOMBAY HIGHCOURT…
also congratulation to rax authorities
PLEASE DONT BLAME GOVT. ALWAYS WITHOUT DOING YOUR PART OF DUTIES CORRECTLY.
SORRY FOR YOU
The action of Tax authorities is justified. Y should the salried persons have to bear tax burden all times..These big companies must be paying taxes if they dont then action against them is definetely needed..So is done by the Tax Authorities..
It’s totally lame on Vodafone’s part to not have thought of tax issues.
I am satisfied with Neha. These tax authorties just want to hang up their circulat tummy to their toes.