Previously Hutch and later Vodafone advertised their cellular services as ”wherever you go, our network follows”. It seems the advertisement inspired not just potential customers, but the taxman too. The Indian income-tax (I-T) department believes it has jurisdiction over the transaction between two foreign companies over an Indian asset.
Also See | Vodafone transaction (Graphic)
The Bombay high court agreedwith the tax department on 8 September. Vodafone believes it is not liable to be taxed and if anyone ought to be taxed for this transaction, it should be Hong Kong’s Hutchison, since it was the seller. The tax department argued that Vodafone should have deducted taxes from Hutchison at the time of the purchase and transferred it to the Indian government. Vodafone has decided to approach India’s top court to decide the matter. As the debate brews over whether India is an investor-friendly market, the apex court’s ruling will be crucial for several such transactions in future. Here’s a look at how the transaction was carried out through various international holdings in tax-free dominions.
Graphic by Uttam Sharma/Mint