Vodafone, Cairn In Talks With Government To Settle Tax Disputes: Report

Dropping pending litigation or forgoing any interest or costs is the first step for companies to become eligible for exemption from the tax rule, which was introduced in 2012.

India is in talks with Vodafone Group Plc and Cairn Energy Plc to settle long-running tax disputes with them, a top government official said after the nation last week moved to abolish a rule on retrospective taxation scorned by investors. "There are some informal discussions going on," Revenue Secretary Tarun Bajaj said in an interview with Bloomberg Television's Haslinda Amin on Monday. "I would not like to discuss them in public domain, but overall the answer to your question is, yes," he said when asked if the companies were willing to drop cases in international tribunals. Dropping pending litigation or forgoing any interest or costs is the first step for companies to become eligible for exemption from the tax rule, which was introduced in 2012 and gave officials the power to go after M&A deals all the way back to 1962 if the underlying asset was in India. Besides opening room to settle disputes with Vodafone and Cairn, the move aims to support the economy's recovery by attracting investment. Fund inflows are crucial to the success of the government's 1.75 trillion rupees ($23.5 billion) asset-sale program, which is key to containing the budget gap after the coronavirus pandemic hurt the economy.