Vodafone tax victory has government mulling options

Excerpts from India Business Hour on CNBC-TV18 Watch the full show »

After the defeat in the Hutchison Vodafone tax case, the government has not yet given up and is considering all options.

Finance Ministry sources say the Central Board of Direct Taxes (CBDT) is studying the Supreme Court judgement and a decision on reviewing the petition could possibly be taken as early as this weekend.

These include filing a review of the verdict, a retrospective or prospective amendment to the I-T Act that could be done through an ordinance.

The Finance Ministry had constituted a 10-member committee headed by the director general of Income Tax, R N Dash to consider these options.

In a judgement that will have wide implications, the Supreme Court last week had set aside the Bombay High Court's decision that had favoured the Income Tax department.

The I-T department had raised a demand of Rs 11,000 crore tax from Vodafone International Holdings following its acquisition of interests in Hutchinson- Essar Limited in 2007 overseas.

In the ruling, the apex court had also asked the Income Tax Department to return Rs 2,500 crore deposited by Vodafone International Holdings within two months along with 4% interest.

The Supreme Court decision will have implications on similar cross-border deals where the companies have not paid capital tax gains.

In view of the Supreme Court judgement, the Essar Group is reportedly contemplating to seek refund of USD 883 million, the amount deducted as withholding tax related to 22% stake sale by its Mauritius entities in Vodafone Essar, from the Income Tax Department.

With inputs from PTI