Essar Group seeks refund of Rs4,000 crore capital gains tax in Vodafone deal case

New Delhi: Ruias-owned Essar Group is seeking a refund of Rs4,000 crore capital gains tax deducted six years ago when it sold stake in telecom venture to Vodafone Plc of the UK. The group’s Mauritius unit, Essar Communications in July 2011 had sold 22% stake in Vodafone Essar for $4.2 billion.

Vodafone, however, paid Essar $3.32 billion after withholding $0.88 billion (around Rs4,000 crore) as tax deducted at source (TDS). It deposited that money with the income tax department as tax on long-term capital gains made by Essar.

Officials said Essar Communications has moved the Authority for Advanced Rulings (AAR) seeking a refund of the tax deposited by Vodafone as it believes that no tax was due on the transfer under the India-Mauritius treaty.


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