Vodafone will have to pay tax once Parliament amends I-T Act: Finance ministry

“They (Vodafone) will have to automatically pay the tax after approval of the amendments to the Finance Bill by Parliament. We don’t need to send a fresh tax demand notice to them,” a finance ministry official said on Wednesday

New Delhi: British telecom major Vodafone will have to pay over Rs11,000 crore tax, once the amendment to change the Income Tax (I-T) Act is approved by Parliament, reports PTI quoting a finance ministry official.

“They (Vodafone) will have to automatically pay the tax after approval of the amendments to the Finance Bill by Parliament. We don’t need to send a fresh tax demand notice to them,” a finance ministry official told PTI.

The government on Tuesday refunded Rs2,500 crore along with 4% interest to Vodafone following dismissal of its review petition against the 20th January order by the Supreme Court.

The government had raised a Rs11,000 crore withholding tax demand on UK-based telecom firm for its $11 billion acquisition deal with Hutchison Essar in 2007.

With an aim to clarify the ‘intent’ of the Income Tax Act, 1961, on taxation of overseas deals involving domestic assets, finance minister Pranab Mukherjee in his 2012-13 Budget has proposed to amend the law with retrospective effect, to ensure that such deals are taxed.

“You can only tax on the basis of existing law. We have no right to tax them, current law will prevail so long law is not changed,” Law minister Salman Khurshid had said Tuesday after a meeting of senior Cabinet ministers following dismissal of review petition by the apex court.

According to the finance ministry official, “an important question is about equity in taxation. While ordinary tax payer pays its taxes honestly, those who have huge wealth do not pay taxes by taking recourse to tax avoidance through creation of multiple structures and routing their investments through low tax and no tax jurisdiction.” 

In the $11.2 billion deal in May 2007, Vodafone had acquired 67% stake in the Hutchison-Essar (HEL) from Hong Kong-based Hutchison Group through companies based in the Netherlands and Cayman Island.

On industry concerns that retrospective amendment to the tax law would create negative sentiments among foreign investors, the official said the apprehension is “not correct”.

Foreign Direct Investment (FDI), he said, “is not primarily dependent upon tax, but is more governed by aspects like huge domestic market, low cost of operation, low labour cost and huge skilled manpower”.

Finance minister Pranab Mukherjee recently said the move was not merely to prevent erosion of revenues in present cases but also to prevent the outgo of revenues in old cases.

Illustrating the point, he had said that suppose the government had collected taxes in such cases during the last 10 years and did nothing after the Supreme Court judgement, companies would demand refund of the tax paid by them.

At the post-Budget briefing, finance secretary RS Gujral had said the amendment could fetch Rs35,000 to Rs40,000 crore.

The finance ministry has said that “intention of the legislature on the initial stage was very clear that the transactions like Vodafone are subject to taxation in India”.

As per experts, the changes in the Income Tax Act will have a bearing on about 500 overseas deals of similar kind.


2G: TRAI vigorously pursued its 2007 recommendations with DoT

 Deposing as a prosecution witness in the ongoing trial of the 2G spectrum allocation case before special CBI judge OP Saini, former TRAI chairman Nripendra Mishra referred to the two letters written by him in 2007 to the DoT requesting to “give weight” to the TRAI recommendations

New Delhi: The Telecom Regulatory Authority of India (TRAI) had ‘vigorously’ pursued with the Department of Telecom (DoT) its 2007 recommendations for low entry fee from telecom companies for allotment of the second generation (2G) spectrum licences, reports PTI quoting former TRAI chairman Nripendra Mishra in a Delhi court.

Deposing as a prosecution witness in the ongoing trial of the 2G spectrum allocation case before special CBI judge OP Saini, Mr Mishra referred to the two letters written by him in 2007 to the DoT requesting to “give weight” to the TRAI recommendations.

“I have been shown a letter and its contents are correct and it bears my signature. Through this letter I requested, inter alia, to give weight to the recommendations of the authority (TRAI) and to precess the same in reasonable time frame,” he said.

“I have been shown another letter dated November 6, 2007 written by me to the Secretary, DoT, D S Mathur and the same bears my signature. Its contents are correct. I was pursuing the issue of consideration of recommendations of TRAI by the DoT vigorously,” Mr Mishra added.

He said competition in the telecom sector and ensuring level playing field was a concern in TRAI’s recommendations.

Mr Mishra made the statements while being cross-examined by Swan Telecom promoter Shahid Usman Balwa’s counsel and said that some of the recommendations made by TRAI were considered subsequent to his letters.

Mr Mishra, however, added, “The consideration of TRAI recommendations by DoT was part of its duties and my letter may not be seen as catalyst”.

He, however, failed to recollect if during his tenure as TRAI chairman between 2004 and 2009 telecom companies sold their equities.

Mr Mishra said “I do not remember if during my tenure as DoT secretary, Shyam Telecom sold its entire equity in Hexagon for Rs430 crore and this transaction for the sale of equity shares”.

“I do not recollect if during my tenure as chairman TRAI several telecom companies sold their equities in both primary and secondary markets,” he said.

He also said allocations of the 2G spectrum licences were to be done in accordance with the Unified Access Services Licence (UASL) guidelines of 2005.

“It is correct that UASL guidelines dated 12 December 2005 were the extant guideline during my tenure as chairman, TRAI, between 22 March 2006 and 22 March 2009 and the DoT guidelines are binding on TRAI also,” he said.

Regarding difference of opinion between DoT and TRAI on a provision of TRAI Act dealing with recommendations on need and timing for introduction of new service providers, Mr Mishra said he had not written to DoT for putting on hold the 122 telecom licences issued during the tenure of former telecom minister A Raja in January 2008.

Mr Mishra answered several questions relating to the teledensity and competition in the telecom industry and said growth in teledensity in rural areas was ‘largely’ because of the competition.

He said the concept of level-playing field was a “prime concern” of TRAI in suggesting the regulatory framework for telecom services and government's policy was in “larger interest” of public and revenue maximisation was not its sole objective.



Public Interest Exclusive
Speak Asia panellist’s repayment under EOW radar

Mumbai-based Navneet Khosla has been paid Rs6.06 lakh of the money he had invested with SpeakAsia by the All India SpeakAsia Panellists Association. The Economic Offences Wing of the Mumbai police is chasing the money trail and is suspecting AIPSA to be supported by SpeakAsia

The Economic Offences Wing (EOW) probing the multi-crore Speak Asia scam is hot on the money that was used to repay, by the All India SpeakAsia Panellists’ Association (AIPSA), to a defrauded panellist. The investigating agency is chasing the money trail and is suspecting AIPSA to be in touch with the multi-level marketing (MLM) company. Sources confirm that this might also lead them to the whereabouts of the absconding top bosses of the Singapore-based MLM scheme.

Mumbai-based Navneet Khosla has been paid Rs6.06 lakh, which he had invested in the company, by the AISPA. He is the only panellist, so far, who has been paid back his invested amount after the scheme collapsed. However, Mr Khosla has not withdrawn his complaint against the company. AISPA, a representative group, claims to safe guard the interest of the panellists of SpeakAsia.

“We have doubt that they are in touch with the master-minds behind Speak Asia. The company did not pay to the complainant. He was paid by AISPA, which collected money from the panellists. But it does not look as simple as this. Many questions are yet to be answered,” said an EOW officer close to the investigation, on the condition of anonymity.

Meanwhile suspecting his arrest, Ashok Bahirwani, general secretary of AISPA, on Tuesday moved an anticipatory bail application in a local Mumbai court. “The matter has been adjourned till 3rd April and till then stay has been granted on his arrest,” said the officer familiar with the Speak Asia investigation.

According to a media report, Mr Bahirwani had written a letter EOW stating he is ready to co-operate with them in the investigation of the MLM scheme, Speak Asia. But the EOW replied that they would arrest him within 72 hours for non-cooperation. The report also states that Mr Bahirwani had been given a 72-hour notice before his arrest by the Bombay High Court after he approached the court for protection from the EOW. It is also reported that some of the panellists are crying foul over harassment by the EOW.

“I have now come to realize that the EOW is not interested in my co-operation they are only interested in my submission and in my surrender before them. The EOW wants me to go before them on my knees, with folded hands and head bowed in abject submission, with fear in my heart,” wrote Mr Bahirwani on AISPA’s website. He was referring to public prosecutor’s reply that he is not co-operating,

However, the investigating agency told Moneylife that, “AISPA is falsely spreading the information that Speak Asia, a MLM company, collapsed because of the EOW. This repayment by AISPA has nothing to do with our investigation. We have many complaints. Still many are coming and lodging new complaints against Speak Asia.”

Speak Asia duped around 23 lakh investors to the tune of Rs2,000 crore. It promises a weekly income, merely on filling online survey forms. Initially the company paid the money to its panellists but stopped all the payments since May 2010. After complaints were lodged, Speak Asia came under the radar of the EOW.

NOTE on Comments:
We are closing comments on this article because majority of the comments are coming from panellists who are using abusive language, which is not acceptable. In case, you think, you have a genuine comment and want to voice it, then kindly write us to [email protected].



5 years ago

speak asia's thought is someone changeging in India.


5 years ago

Where are our great "proud" cheap Asians .....sorry, Speak Asians? !!


5 years ago


What will happen to this country if EOW starts harassing the citizens? Somebody who was to protect the interests of a million + people is trying to mint millions out of them.



In Reply to parasmani 5 years ago

You mean Singaporean Citizens? If a Singaporean Citizen cheat gullible India Citizens should the EOW play mute spectator?

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