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' Indo- Dutch pact doesn't cover tax issues at all' [Mail Today (India)](Mail Today (India) Via Acquire Media NewsEdge) AN inter- ministerial group headed by finance secretary Sumit Bose has concluded that the India- Netherlands Bilateral Investment Promotion and Protection Agreement ( BIPA), which the Vodafone Group has invoked in its battle against the Income Tax ( I- T) Department, does not cover tax issues at all. Vodafone had sent an arbitration notice to the I- T Department under BIPA to contest the capital gains tax that it was being asked to pay over the acquisition of Hong Kong- based Hutchison Whampoa's stake in Indian telecom major Hutchison Essar in 2007. " The tax department has finalised its response to the notice saying BIPA does not cover tax issues. The reply has been sent to the finance minister," a senior official confirmed. While the basic tax demand for the acquisition is ` 7,990 crore , the penalty and interest on the amount take the total figure to around ` 20,000 crore. The Cabinet had in June 2013 approved a finance ministry proposal to go in for conciliation with Vodafone to resolve the tax dispute. However, the talks broke down after Vodafone issued a supplementary notice to the government, invoking BIPA and demanded that the ` 3,700 crore transferpricing case of Vodafone India Services also be clubbed with the capital gains tax issue. The Income Tax Appellate Tribunal ( ITAT) had in December stayed the ` 3,700 crore tax claim by the I- T Department on Vodafone India in the transfer- pricing dispute. However, it had asked the telecom company to deposit ` 200 crore as initial payment and submit bank guarantees for the remaining sum. In the capital gains case, the Supreme Court had ruled in Vodafone's favour in 2012. However, the government had amended the law so that the tax could be levied retrospectively. (c) 2014 India Today Group. All Rights Reserved. Provided by Syndigate.info, an Albawaba.com company |