Cairn, others ready to settle case under retro tax scheme

Cairn Energy and most of the companies that have tax disputes relating to the controversial 2012 retrospective tax provision have approached the government to settle their cases under a scheme offered.

Vodafone is the only company that has yet to apply formally. The telecom operator has to make its application under a separate provision notified later and, therefore, has more time to do so.

A news agency report said Thursday that the government has accepted Cairn Energy PLC's undertaking that would allow for the refund of taxes.

Under the scheme, the government would return the principal tax collected invoking the retrospective provision without any interest or penalty, if the companies agree to withdraw all cases and proceedings.

The government has to refund ₹7,880 crore to Cairn, ₹44.7 crore to Vodafone, ₹119 crore to New Cingular Wireless and ₹47 crore to WNS Global. No tax was collected from any other company.

"All companies have applied...Vodafone has time as rules were notified earlier," a senior government official told ET.

The government had initiated action against 17 companies under the retrospective provision introduced in 2012.

The government had amended the income tax law and the finance Act through the Taxation Laws (Amendment) Act 2021 to settle retrospective tax cases. The amendment nullified tax demands raised on transactions prior to May 28, 2012, which is when the controversial law came into force. The Central Board of Direct Taxes notified the final rules for settlement of retrospective cases on October 2.

The companies can now settle the cases with the government under the framework within 30-60 days.