Mumbai I-T dept could lose Rs 10,000 crore
With the apex court ruling in Vodafone case that transfer of shares of a foreign company between two non-residents is not taxable, the Mumbai income tax (I-T) department now stares at an estimated loss of Rs10,000 crore.mumbai Updated: Jan 24, 2012 00:52 IST
With the apex court ruling in Vodafone case that transfer of shares of a foreign company between two non-residents is not taxable, the Mumbai income tax (I-T) department now stares at an estimated loss of Rs10,000 crore.
"There are 5-6 similar cases with the Mumbai circle that would be affected due to the judgment," said a senior I-T official requesting anonymity. "Hence, there would be tax loss from these companies."
Following the Supreme Court (SC) order, the department will have to refund Rs2,500 crore deposited by Vodafone as the case was pending. It will also have to pay an interest of Rs100 crore.
The department, which is reeling under pressure due to slow growth, is expected to fall short of target by a considerable margin. The tax collection target for Mumbai circle is Rs2.04 lakh crore that has to be met by March 31. The department was expecting a shortfall of anywhere between Rs25,000 crore to Rs50,000 crore.
"Now the refund to Vodafone would add to the loss," said the official.
Senior authorities in the Mumbai circle had meetings on Monday to discuss steps that could help in increasing tax collection. "However, we don't see any measure helping in overcoming this loss, as only little over two months are remaining for the financial year to end," the official said.
He said that the only solution could be to speed up cases pending in appeal and litigations. "Also we need to conduct frequent searches and surveys to unearth unaccounted money that would get us some amount in tax," he said.