Cabinet approves conciliation on Vodafone tax demand

The cabinet has approved the conciliation with Vodafone Plc. According to CNBC-TV18, the Cabinet has accepted conciliation but only under Indian laws and not international laws. That means the conciliation will not be under United Nations Commission on International Trade Law (UNCITRAL) rules.

A Cabinet note on Vodafone had sought approval accepting Vodafone Plc's offer for conciliation. Sources say the conciliation will be under part III of the Arbitration and Conciliation Act. The revenue department will offer conciliation under India laws. If Vodafone accepts the counter offer, sources say the Income Tax department will take the matter ahead. However, if Vodafone declines conciliation, the I-T department may make a counter offer under common law. Also Read: Vodafone conciliation offer enabled by attorney general Sources say the prime minister and finance minister will appoint conciliator on behalf of the Department of Revenue (DoR). The DoR will advise the assessing officer to keep tax demand, interest and penalties in abeyance until conciliation process concludes. The DoR will also submit a draft settlement to Cabinet for approval. Sources say conciliators are formulating terms of possible settlement. After the Cabinet approval, a proposal will be made for legislative changes. Sources say the changes will address tax litigation from retro amendments. It will then incorporate clarificatory amendments in the Finance Act 2012.