Cairn Energy slapped with Rs 29, 000 crore retrospective tax

After Vodafone Group, UK’s Cairn Energy plc was slapped with a tax demand notice of more than Rs 29,000 crore, including Rs 18,800 crore in back dated interest.

This move comes at a time when the Indian government said it will not raise any fresh tax demand using retrospective tax legislation.

The notice was however issued before Finance Minister Arun Jaitley in his Budget for 2016-17 made a one-time offer to waive interest and penalty if the companies paid the principal amount to settle the retrospective tax disputes.

"The assessment order is in the amount of Rs 10,247 crore (approximately USD 1.6 billion) plus interest back dated to 2007 totalling Rs 18,800 crore (approximately USD 2.8 billion)," Cairn Energy said announcing its earnings.

I-T Department alleges that Cairn Energy made a capital gain of Rs 24,503.50 crore in 2006 when it transferred shares of Indian assets that were held in a subsidiary set up in the tax haven of Jersey, to newly incorporated Cairn India.

It listed Cairn India Ltd on the stock exchanges through an initial public offering (IPO) thereafter. Through the IPO it raised Rs 8,616 crore and then in 2011 went on to sell majority stake in Cairn India to mining giant Vedanta Group for USD 8.67 billion.