Vodafone faces tax charge

The income-tax department has served an order on Vodafone International Holdings, saying that it had authority to levy a withholding tax on Vodafone’s Rs 52,080 crore deal to buy 67 per cent stake in Hutchison Essar Ltd in 2007.

The income-tax department has served an order on Vodafone International Holdings, saying that it had authority to levy a withholding tax on Vodafone’s Rs 52,080 crore deal to buy 67 per cent stake in Hutchison Essar Ltd in 2007.

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“Vodafone remains fully confident that no tax is payable by Hutchison on this transaction and that Vodafone has no liability in any event...,” said a Vodafone Group spokesperson.

The tax department argued that Cayman Islands-based transaction was a transfer of an Indian asset and that Vodafone should have deducted tax at source when it paid Hutchison. The spokesperson also said the company had right of appeal to the Bombay High Court if it disagreed with the I-T order.