Vodafone will have to pay over Rs 11,000 crore tax, once the amendment to change the Income Tax Act is approved by Parliament, a Finance Ministry official said today.As per finance Ministry official Vodafone have to automatically pay the tax after approval of the amendments to the Finance Bill by Parliament and they don’t need to send fresh tax demand notice to them.
The government had raised a Rs 11,000 crore withholding tax demand on UK-based telecom firm for its USD 11 billion acquisition deal with Hutchison Essar in 2007. With an aim to clarify the “intent” of the Income Tax 1961 on taxation of overseas deals involving domestic assets, Finance Minister Pranab Mukherjee in his 2012-13 Budget has proposed to amend the law with retrospective effect, to ensure that such deals are taxed.
According to the Finance Ministry official, “an important question is about equity in taxation. While ordinary tax payer pays its taxes honestly, those who have huge wealth do not pay taxes by taking recourse to tax avoidance through creation of multiple structures and routing their investments through low tax and no tax jurisdiction.”