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No 'rash' action in Vodafone case: FM

business Updated: Sep 03, 2012 22:39 IST
HT Correspondent
HT Correspondent
Hindustan Times
Finance minister

Finance minister P Chidambaram on Monday said the government will not take any "rash" action against British telecom giant Vodafone in a five-year old tax dispute with Indian authorities.

"They (I-T assessing officers) and are not going to act rashly," said Chidambaram. "These are not small amounts on which you can take a rash decision."

The finance ministry will wait for the final report of the Parathasarathi Shome committee later this month before taking a decision, he said.

In January, Vodafone won a $2.2-billion (R11,200-crore) tax battle after the Supreme Court ruled that the company was not liable to pay any taxes under prevailing laws.

The finance ministry, in this year's budget, proposed changes in 50-year-old tax laws to impose a retrospective provision for tax on some types of global mergers that may include Vodafone's 2007 acquisition of Hutchinson's mobile assets in India.

"There is section 119. There is a Supreme Court judgement. There is opinion of the Attorney General. All this have to be studied by the assessing officer and his supervising officers... They will study all that. In the meanwhile, we will get the Shome committee's report also," he said.

Section 119 of the Finance Act, 2012 seeks to validate the October 2010 order of the Income Tax Department.

The Shome panel, which was set up in July to recommend a roadmap on tax avoidance rules, has proposed deferring the controversial General Anti Avoidance Rules by three years in its draft report.

GAAR seeks to empower taxmen to clampdown on deals and income suspected to have been structured only to avoid paying taxes.

The finance minister also promised a non-adversarial tax collection approach, with focus only on those small percentage of taxpayers, who are not tax compliant.

He also said efforts would be made to increase the tax to GDP ration to 12% to improve government finances.