Vodafone in talks with FinMin for settling tax case

Vodafone's non-executive chairman Analjit Singh met the finance minister today over setting the tax dispute. CNBC-TV18 learns that the talks are now stuck over the issue of the Rs 3,500 crore interest payment. Government is ready to waive off the penalty but Vodafone wants an interest and penalty waiver and is ready to pay the tax. CNBC-TV18's Aakansha Sethi reports.

One of the biggest questions this year after the budget and the retrospective amendment has been: how the government will settle Vodafone-like tax cases? CNBC-TV18 learns from sources that the finance ministry and Vodafone have been in negotiations to settle the tax case.
However, the negotiations broke down last time over the payment of the interest amount of Rs 3,500 crore. The finance ministry wants that Vodafone should pay the tax amount as well as the interest amount and it is willing to waive off the penalty amount. Under Section 253(A) of the I-T Act, the government does have the powers to waive off the penalty amount. However, Vodafone wants both the penalty and interest should be waived off and then it is willing to pay the tax amount.
Sources in the government tell CNBC-TV18 that politically at this point in time it is difficult to make the retrospective amendment prospective as was recommended by the Shome Committee and hence the best option really is to settle the tax case.
Now, it remains to be seen if these negotiations actually succeed and the case is settled because that will determine the outcome of what happens to the Section 9 retrospective amendment and as of now sources in the government say that the unintended consequences of Section 9 will be removed, but making the retrospective amendment prospective will be difficult.
Even in the ITC case the government had come to a settlement and at that time too the finance minister was P Chidambaram. So, it remains to be seen if that format will be followed and these negotiations will be successful.