India to reimburse only Rs 40 crore to Vodafone and not Rs 20,000 crore in tax arbitration case

Vodafone Group Plc said on Friday it had won an international arbitration case against the Indian government, ending one of the most high-profile disputes in the country involving na over ₹ 20,000 crore in dues which it had described as unfair. An international arbitration tribunal in The Hague ruled that India's imposition of a tax liability on Vodafone, as well as interest and penalties, were in a breach of an investment treaty agreement between India and the Netherlands, two sources with direct knowledge of the matter said.

However, contrary to the believe, international arbitration tribunal in The Hague has ordered the Indian government to pay only Rs 40 crore to the telecom giant and not Rs 20,000 crore, according to government sources.

"There is the wrong impression that the government will have to return Rs 20,000 crore because of this judgment. However, the government has been asked to pay only 4.3 million pounds, ie, about Rs 40 crore. This is equal to 60 per cent of the tribunal’s administrative cost while the rest 40 per cent of the cost would be borne by the Vodafone," sources said.

Additionally, if the government decides not to appeal the judgment, it may have to return the tax collected from the telecom firm, which is about Rs 45 crore. Thus, the total outgo would be around Rs 85 crore only, the sources said.

"The verdict is under study by the Indian authorities and legal counsels who would seek suitable legal remedies at appropriate forums," they said.