Govt-Vodafone set for talks: Is amicable solution in sight?

The finance ministry has sent back a response to Vodafone in the tax tussle case thereby kicking off official talks on the tax dispute. A meeting is expected shortly between the revenue secretary and Central Board of Direct Taxes (CBDT) chair person with Vodafone executives and the interest waiver is likely to be the clincher in the resolution. CNBC-TV18's Aaksnsha Sethi reports.

The meeting has not been scheduled as yet. Earlier, Vodafone had written to the government seeking an amicable solution and now the government has written back to them. Hence, the revenue secretary will meet Vodafone executives in presence of the CBDT chairman. The likely point of contention in these negotiations, is the interest waiver, because the government is okay with the penalty waiver to the tune of Rs 8,000 crore. However, Vodafone wants both an interest and penalty waiver and the interest waiver will amount to about Rs 3,000 crore. The problem here is, for an interest waiver the government may have to amend the Income Tax Act. Though, the Income Tax department has powers to give penalty waiver, an interest waiver is not in its hands. It remains to be seen whether the two parties meet on this issue or not and whether Vodafone accepts just the penalty waiver, and agrees to pay the tax amount. These questions will be answered only once the negotiations formally kick-off.