Centre seeks review of Supreme Court verdict in Vodafone tax case
The Budget is scheduled to be tabled on March 16. At present, a deduction of up to Rs 1.5 lakh is available from taxable income towards interest on loan taken for house.
The government has filed a review petition in the Supreme Court in the Vodafone tax dispute case. This means it would request the Supreme Court to reconsider the verdict.
On 20 January 2012, the Supreme Court ruled in favour of Vodafone in a $ 2.5bn tax dispute and said that Indian tax officials do not have jurisdiction over a deal between two global companies even if assets involved in that deal are located in India.
Vodafone had argued that India cannot levy taxes because the transaction was made between non-Indian companies outside the country. The deal was between, Vodafone International Holdings BV - a Dutch subsidiary of the UK firm and CGP Investments Ltd., a Cayman Islands company which held the Indian telecom assets of Hutchison. Vodafone lost its case in the Bombay High Court in 2008 and then appealed against that verdict in the Supreme Court.
The Vodafone verdict throws light on the jurisdiction of Indian tax authorities over holding structures of businesses. It is considered as the central reference point for determining the structure of deals which see Indian assets located in India being traded outside the country - in tax havens like the Cayman Islands, for example.
Earlier this month, the finance ministry set up a three-member committee headed by the (DGIT) Director General of International Taxation, R N Dash. The committee made suggestions to the Central Board of Direct Taxes (CBDT), on the possible options following the Vodafone verdict. The verdict meant that the government would not receive over Rs 12,500 crore in expected revenue. At the same time, the government could consider making changes in tax laws that clearly define the jurisdiction of tax authorities.