The Bombay High Court verdict upholding the $2-billion (Rs. 10,000 crore) tax notice on global telecom major Vodafone has strengthened the hands of the Income-tax Department to scrutinise the sale of assets in India to a foreign buyer, Central Board of Direct Taxes (CBDT) Chairman N. B. Singh said here on Thursday.
[The] Bombay High Court has upheld our jurisdiction to look into the case. Total tax liability is estimated to be around $2 billion, Mr. Singh told newspersons.
Noting that the CBDT would also file a caveat in the Supreme Court as Vodafone proposed to approach the apex court against the High Courts decision, the CBDT chief said: The decision of the court in this case has strengthened the hands of the Income-tax Department in its attempt to bring to tax in India transactions involving transfer of assets situated in India between entities located outside the country.
In a $11.2-billion deal, Netherland-based Vodafone Holdings International had picked up Hutchisons stake in Hutchison-Essar in 2006 to form a new entity Vodafone-Essar Ltd. Subsequently, the IT authorities issued a notice to Vodafone-Essar last year for capital gains tax amounting to $2 billion.
On the question of achieving the direct tax collection target this fiscal even in the wake of the slowdown in growth, the CBDT Chairman said: We are confident of achieving the 2008-09 target of Rs. 3,95,000 crore. He noted that although the revised tax collection target was not an easy one, especially in view of the slowdown, but the Government was not far behind from achieving it.
The mop-up through direct taxes during the first seven months (April-October) of the current fiscal was Rs. 1,66,905 crore, up 29.52 per cent as compared to the same period last fiscal.
While corporate tax collections rose by 33.49 per cent to Rs. 1,05,174 crore, the revenue from personal income tax also went up by 23.14 per cent to Rs. 61,433 crore during the period.
Realisations from TDS (tax deducted at source rose by 35.78 per cent and self- assessment tax by 52.76 per cent during the seven-month period.