There may be hope for telecom and information technology majors Vodafone, Nokia and IBM: when the Narendra Modi-led NDA government assumes office, they are likely to be invited for out-of-court settlements of their pending tax disputes in India.
A senior telecom ministry official close to former NDA government leaders said such an invitation was highly likely.
A communications ministry official who handles tax and finance departments, however, said that “as a policy, the government can review the tax imposed, but not when it is a rule.”
Prime Minister-in-waiting Modi is likely to announce a slew of pro-investment decisions in June, when the Cabinet meets to discuss the economic policy roadmap for the NDA government. “Taxation, especially in telecom, cannot be a hindrance for future investments, it will be revisited,” said a source close to senior functionaries of BJP’s economic wing.
Vodafone is facing a Rs. 20,000 crore tax case in India, while US-based IBM is contesting a revenue department claim that values the company’s taxable income at a substantially higher-than-disclosed Rs. 11,000 crore. Nokia’s Indian subsidiary is under an I-T notice for violating withholding tax norms since 2006 while paying royalty to the parent company.
Responding to an email from HT, a spokesperson for Nokia said, “Nokia is keen to work with the new government … to seek amicable resolution of the current tax dispute.”
Vodafone did not respond to HT’s email.