Companies like Vodafone Group Plc of the UK and Cairn won’t be disturbed by the Indian government for clearing back taxes. In simple words, 'back taxes’ refer to the taxes that a company has avoided paying on a certain transaction. According to a PTI report, the Indian government has proposed a new bill in the Lok Sabha, which will withdraw tax demands on all the indirect tax transfers made on Indian assets prior to May 28, 2012.
Vodafone Group Plc Will be Very Happy With Indian Government
Vodafone Group Plc, a UK based company, will be benefiting a lot from the decision. Until now, the Indian government had been persistent about getting all the amount that was due from the Vodafone Group and Cairn.
In fact, the government was challenging the decision made by the international arbitration tribunal where the tribunal had overturned the government’s demand of Rs 22,100 crore from the Vodafone Group in back taxes. India had moved to a senior court in Singapore for clearing out this matter, and the hearing was due in September.
However, in an interesting turn of events, India’s Finance Minister, Nirmala Sitharaman, has introduced ‘The Taxation Laws (Amendment) Bill, 2021’ in the Lok Sabha, which looks to withdraw all the tax demands from the government made for indirect transfer of Indian assets before May 28, 2012.
In fact, the bill proposes to refund any such amount that a company has already paid but without interest. It is worth noting that this doesn’t benefit Vodafone Idea, the Indian Telecom firm, in any manner. The back taxes relief is for the Vodafone Group Plc of the UK, which has the largest promoter stake in Vodafone Idea (Vi).
Vodafone Idea still has to pay its complete dues to the government, and the Vodafone Group Plc has made it very clear that it doesn’t want to infuse any more capital into the company.