IT dept may end Vodafone's tax woes by Budget with circular

Even as the Income Tax department and Vodafone executives have held several rounds of talks to settle Rs 11,200-crore tax dispute, the absence of enabling provisions for a settlement is likely to be addressed in the forthcoming Budget.

This move would not only solve the Vodafone tangle but benefit several other companies. And there is growing support for such a provision. Former CBDT chairman R. Prasad, who is currently a member of the Competition Commission of India, told CNBC TV18 that tax authorities could issue a circular exempting a class of assesses from the levy of penalty and interest. And this could well be the solution that the finance ministry may unveil in the coming Budget, reports Siddharth Zarabi of CNCB-TV18
Parliament has the power of retrospective amendment and once the Parliament has legislated we have no option but to move ahead. We have to implement the law as it stands.
As far as penalty interest is concerned, as Parthasarthy Shome has recommended this should not be levied in many cases. Central Board of Direct Taxes (CBDT) can come out with a circular that this class of assesees they will be exempted from the levy of penalty in these cases because this retrospective amendment as long as the principal is paid, anything is possible. Vodafone is not the only case there are many other cases. So, whatever view one take in Vodafone that view will have to be taken in the other cases also. That is the whole problem.