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Telecom tax resolution on agenda: Prasad

india Updated: Jun 17, 2014 20:55 IST
resolution of tax disputes

The finance ministry is looking into the resolution of tax disputes faced by telecom firms such as Nokia and Vodafone even as the new BJP government looks at pepping up manufacturing to boost the economy, telecom minister Ravi Shankar Prasad said on Tuesday.

Prasad, in his first formal press conference since taking over three weeks ago, said the government is working on expansion of telecom services, incentives for chip-making units in certain cities and the setting up of postal banks.

"The government has been repeatedly sharing its concern that retrospective taxation is something that needs to be avoided. As far as resolution is concerned, as I told you, the Finance Ministry is looking in to it," he said, referring to the tax disputes involving telecom firms.

However, he refused to comment on specific tax issues.

Vodafone faces a tax liability of over Rs 20,000 crore over its 2007 acquisition of Hong Kong-based Hutchison Whampoa's Indian mobile assets.

The British company has rejected the demand, saying any tax, if due, was on the seller rather than the buyer.

Nokia was forced to abandon the transfer of its Chennai plant to Microsoft Corp in April, part of the software company's acquisition of the Finnish firm's handset business, because of a tax standoff.

Prasad said the government plans to spend Rs 5,000 crore to set up about 8,000 mobile towers in the northeastern states and also monitor the deployment of mobile towers in nine Naxal-infested states.

"In north east, telecom infrastructure will be strengthened. The government will set up over 8,000 towers at a cost of Rs 5,000 crore," Prasad said.

On a recent report by Vodafone, which said India is among 29 countries that sought access to its network to intercept calls, SMSes and e-mails, Prasad said he has asked the Department of Telecom to look into it and work with its representative for early redressal of the matter.

The minister said he will focus on connecting 2.5 lakh village panchayats with broadband in the next three years.

"Mr Atal Behari Vajpayee's govt was known for national highways and Narendra Modi's govt will be known for broadband highways," Prasad said.

He said that 50,000 village panchayats will be connected with a national optical fibre network in 2014-15, another 1 lakh in 2015-16 and the remaining 1 lakh in 2016-17.

Prasad said he has asked the postal department to work on a proposal for setting up postal banks.

"We are going to start a new scheme of postal banking. In my priorities, I have selected postal bank also...Earlier postal department had applied for licence before RBI which is on hold as of now" he said.