Vodafone India Faces Tax Liability Of More Than Rs 27,000 Crore

Vodafone India is facing tax liability and interest amounting to more than Rs 27,000 crore, the company said in its annual report. Vodafone said its Indian subsidiary had received a letter in January 2013, reminding it of the tax demand of Rs 14,200 crore regarding the dispute over acquisition of Hutchinson in 2007.

The company faces tax demand following the retrospective tax amendment brought about in 2012.

The report said, “Vodafone International Holdings BV (VIHBV) has not received any formal demand for taxation following the Finance Act, 2012, but it did receive a letter on January 3, 2013, reminding it of the tax demand raised prior to the Indian Supreme Court’s judgment and purporting to update the interest element of that demand in a total amount of Rs 142 billion.”

Besides, the UK-based telecom company is also facing tax liability of more than £1billion. These claims pertain to transfer pricing and value-added tax.

According to the report, “Vodafone India (VIL) and Vodafone India Services Pvt Ltd (VISPL) are involved in a number of tax cases with total claims exceeding £1 billion plus interest and penalties of up to 300% of the principal.”

At current rate, £1 billion is worth Rs 9,900 crore.

The Supreme Court had ruled in favour of Vodafone. However, the government of India amended the law with retrospective effect in 2012.