Idea Cellular Ltd, the country's third-largest mobile carrier by revenue, and one of its subsidiaries have been issued with tax demands totalling Rs 39 billion ($710 million) by authorities, media reported on Saturday.
Idea said on Friday that it had received the demands, which relate to a restructuring exercise approved by courts more than three years ago, but did not disclose the amount.
The transfer of assets between Idea and its unit Aditya Birla Telecom were subject to capital gains tax according to tax officials, the Economic Times reported, citing an unidentified person close to the development.
The company, part of the $40 billion Aditya Birla Group conglomerate, said on Friday it believed the demands were "unjustified and based on erroneous interpretation of current tax laws".
Idea is evaluating options including challenging the tax demand, the company added.
($1 = Rs 54.8350)