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British Oil Major Cairn Energy’s Tax Caper: Why Centre Is Right In Being Rational, Rather Than Pretending To Be Liberal

India will file an appeal against the Cairn arbitration award that has asked India to return $1.4 billion to Cairn Energy Plc. The government source also said, “Cairn had set up a tax abusive structure and did not pay taxes anywhere in the world on the gains that it made in India. In the said case, it was well within India’s sovereign powers to redress the situation of Double Non-Taxation and tax abuse.”

An international tribunal had in December 2020 unanimously ruled that India violated its obligations under the UK-India Bilateral Investment Treaty in 2014, when the Income Tax Department slapped a Rs 10,247 crore tax assessment using legislation that gave it powers to levy taxes retrospectively.

Soon after seeking Rs 10,247 crore in taxes over alleged capital gains made by the company over a 2006-07 reorganisation of India business before its listing, the tax department seized Cairn’s residual 10 per cent stake in Cairn India.

India had earlier challenged in Singapore an international tribunal’s verdict in favour of British telecom giant Vodafone Group in a case involving a Rs 20,000 crore demand from the Indian income tax authorities.

It is good that the Narendra Modi government is digging in its heels and continuing the good work initiated in 2012 by the former finance minister late Pranab Mukherjee

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