Govt working on Vodafone tax issue resolution: FM

Finance minister P Chidambaram today expressed confidence that the government will find a resolution to the Vodafone tax issue. He told reporters after meeting global investors here that the issue figured only peripherally and came up as a question.

"I did clarify to them that Vodafone has formally offered to engage with the government of India in discussions. They had two rounds of discussions with the officials of government of India. "I am confident that we will find a resolution to the Vodafone issue so that we can put it behind us and move forward," he said.

Vodafone has been slapped with an income tax demand notice of Rs 11,200 crore on its 2007 acquisition of Hong Kong-based Hutchison Whampoa's stake in its Indian telecom business. The liability arose following the then Finance Minister Pranab Mukherjee amending the Income Tax Act, 1961 with retrospective effect to undo the Supreme Court judgement that had ruled in favour of the company.

The government is working towards a solution based on recommendations of the Shome panel which suggested that either the government should withdraw the retrospective tax amendment or waive the penalty in case it had to recover the taxes.