Voda, govt keen to end tax tiff; waiver possibility high

The most likely settlement of the tax dispute is that the government, under the Income Tax Act, uses its powers to waive the penalty and interest of about Rs 12,000 crore and direct Vodafone to pay the basic tax amount of Rs 8,000 crore.

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The government reached a similar settlement in the dispute with ITC and the then finance minister P Chidambaram engineered that whole deal. So this important option has always remained with the the government.

The possinility of a settlement is high with Vodafone agreeing to the government's option. The settlement of the dispute, will finally be determined by the Shome Committee recommendations which will be announced by the end of September regarding the Retrospective Amendment of Section 9.

The Shome Committee has the option of making or recommending that the retrospective amendment should in fact be prospective and if that comes into effect then Vodafone may not have to pay any tax at all.

Currently, the government is contemplating the option of a wavier of interest and penalty.

Analjit Singh told CNBC-TV18 that he was happy to discuss the company's tax problems  with the government.

Analjit Singh denied any foreknowledge or indication on the possibility that the Shome Committee’s recommendations could include the suggestion that the retrospective amendment be changed to have prospective effect.

 On the provisioning of USD 2.2 billion, he clarified that Andy Halford, group-CFO Vodafone, who is compliant with accounting and tax laws, indicated about making a provision, but did not specify or comment about the number.

"Andy Halford talked about looking at the possibility of making a provision. So, as a responsible CFO, he is obliged to do that. But Vodafone has absolutely not cited any number."

Commenting on his discussion with the CBDT, Analjit said that he had made the company's position very clear that we are completely ready to discuss any matter. We are ready to discuss solutions."

Analjit also refused to comment if the company was prepared to pay Rs 8,000 crore if the government was ready to waive the penalty and interest.

"We are ready to discuss. Vodafone is not a confrontationist company. This is not Vodafone business. Our business is building and running telecom networks. So, Vodafone is definitely willing to discuss. But I don't want to answer questions on arbitration and negotiation."