Analjit Singh meets FM, says keen to settle Vodafone tax issue

Faced with over Rs 11,200 crore (Rs 112 billion) tax liability, Vodafone India chief Analjit Singh on Thursday met Finance Minister P Chidambaram for the second time this week and expressed the hope that there will be clarity soon on the proposal to settle the dispute through conciliation.

"I will be in a much better position to give clarity on tax settlement issue next week," he told reporters after meeting the Finance Minister.

The British telecom major is facing a tax liability of over Rs 11,200 crore, along with interest, on its 2007 acquisition of Hutchison Whampoa's stake in Hutchison Essar.

Vodafone had earlier expressed its keenness to reach an amicable settlement of the matter.

Singh said he would be meeting the Finance Minister again next week. Earlier, Vodafone had offered to settle the dispute through conciliation to which government agreed, but there are differences over the rules under which it would take place.

While the British telecom major has shown keenness to go in for conciliation under the United Nations Commission on International Trade Law (UNCITRAL), India has proposed settlement under the Indian Arbitration and Conciliation Act.

The Supreme Court last year had ruled in Vodafone's favour, saying the British company was not liable to pay any tax over its 2007 acquisition of mobile phone assets in India.

The government later that year changed the rules to enable it to make retroactive tax claims on already-concluded deals, drawing criticism from global business groups.

Following amendment to the I-T Act 1961 last year, the Income Tax Department had issued a letter in January to Vodafone International Holdings BV stating that the company is required to pay the tax.

Vodafone replied saying that they do not owe anything to the Indian Government. Vodafone earlier wanted to take India to international arbitration but later offered conciliation on the issue.