With the Lok Sabha passing the Finance Bill, with the amendment clause on retrospective taxation intact, the income tax (I-T) department is working towards issuing a new notice to Vodafone that will demand interest and not penalty on the original tax demand of Rs. 7,900 crore.
According to a source in the I-T department, as per section 201(1) & (2) of the Income Tax Act, interest at the rate of 2.5% will be levied on the original tax demand.
"No penalty will be levied... penal interest would be levied and the assessing officer in the particular case will decide it," the source said.
As per the section 201 (1) and (2), an assessee will be liable to pay simple interest at the rate 1% and 1.5% for every month on the demand amount till the tax is paid. The previous tax notice to Vodafone was for R11,500 crore, including interest.
"We're studying the case and if the Supreme Court has vacated the demand, a fresh notice will be issued to Vodafone, or else a communication will be sent," the source said.