Skip to content
Search

Latest Stories

India pays Cairn £780m to settle retro tax dispute

India pays Cairn £780m to settle retro tax dispute

INDIA has paid Cairn Energy Plc Rs 79 billion (£780 million) in a refund of taxes it had collected to enforce a retrospective tax demand.

The payment ends a seven-year-old dispute that had tarred the country's image as an investment destination.

Cairn Energy, which is now known as Capricorn Energy PLC, said in a statement that it has received "net proceeds of $1.06 billion", of which nearly 70 per cent will be returned to the shareholders.

The Indian tax department had used a 2012 legislation, which gave it powers to go back 50 years and slap capital gains levies wherever ownership had changed hands overseas but business assets were in India, to seek Rs 102.47 bn (£1.01 bn) in taxes from Cairn.

Cairn had in 2006-07 reorganised its India business, which comprised operations of prolific Rajasthan oilfields, before its listing on stock exchanges.

While the company sold majority holding in the Indian unit to Vedanta in 2011, it was in 2014 slapped with the tax demand notice over alleged capital gains made on the reorganisation.

The British firm contested the demand, saying all taxes were paid when the reorganisation, which was approved by all statutory authorities, took place.

But the tax department in 2014 attached and subsequently sold the residual shares that Cairn held in the Indian unit. It also withheld tax refunds and confiscated dividends to settle part of the tax demand. All this totalled Rs 79 bn (£780m).

Cairn dragged the government to international arbitration over the levy and enforcement proceedings.

On December 22, 2020, it got a favourable ruling that asked India to refund the tax collected together with interest and penalty.

The government initially refused to honour the award but in August 2021 brought a law to scrap all retrospective tax demands and refund money collected but without any interest or penalty.

The change of heart followed Cairn initiating seizure of the Indian government's overseas assets - ranging from flats used by its diplomatic staff in Paris to Air India planes in the US - to recover the refund due.

As part of the settlement reached with the government over the levy of back taxes, Cairn withdrew all cases.

Simon Thomson, chief executive, Capricorn Energy, commented: "India has a special place in our company's history and we are very pleased that this issue has now been concluded."

He said the company's investment in India began in the 1990s when it was one of the first international businesses to participate in the country's oil and gas industry with operations in Andhra Pradesh in south India and then Gujarat in the west.

But it was the discovery of the Mangala oil field in Rajasthan in January 2004, one of the biggest hydrocarbon discoveries in India, that had the biggest impact.

"The company ultimately made more than 40 discoveries in the area and constructed the world's longest heated pipeline to take the crude from the Mangala Processing Terminal to the coast, with production commencing in August 2009. Today, the terminal continues to provide more than a third of India's entire crude oil production," he said.

Seeking to repair India's damaged reputation as an investment destination, the government in August 2021 enacted new legislation to drop Rs 1.1 trillion (£11 bn) in outstanding claims against multinationals such as telecom group Vodafone, pharmaceuticals company Sanofi and brewer SABMiller, now owned by AB InBev, and Cairn.
(PTI)

More For You

India jewellery

The US accounts for nearly £7.6 billion, or 30.4 per cent, of India’s annual gems and jewellery exports.(Photo: Reuters)

Reuters

India’s jewellery exports face decline as US tariffs hit

INDIA’s £24 billion gems and jewellery industry is preparing for a sharp decline in exports as the US imposes a 26 per cent tariff on Indian goods.

Industry officials said this would significantly affect sales to the US, India’s largest jewellery market.

Keep ReadingShow less
ronnie screwvala

Ronnie Screwvala’s rise to billionaire status is an inspiring story of vision

Getty

Ronnie Screwvala: From toothbrush seller to Bollywood's lone billionaire

The 2025 edition of the Forbes Billionaire List was released on Wednesday morning, showcasing the world's wealthiest individuals. The list features 3,028 billionaires globally, including 205 from India. Among these is Bollywood's only billionaire, Ronnie Screwvala, a media mogul whose journey from manufacturing toothbrushes to becoming a leading entrepreneur is nothing short of remarkable. With a net worth of $1.5 billion, Screwvala has surpassed the combined fortunes of Bollywood’s biggest stars, including Shah Rukh Khan, Salman Khan, and Aamir Khan.

Bollywood’s wealthiest man

Ronnie Screwvala stands as the richest person from the Hindi film industry, with a fortune exceeding that of its biggest icons. According to Forbes, his net worth of $1.5 billion surpasses the combined wealth of Shah Rukh Khan ($770 million), Salman Khan ($390 million), and Aamir Khan ($220 million), whose total stands at $1.38 billion. Additionally, he eclipses other notable figures such as Gulshan Kumar (approximately $900 million) and Aditya Chopra ($800 million). His financial success is a testament to his entrepreneurial acumen and strategic investments in both entertainment and education sectors.

Keep ReadingShow less
Donald Trump

Trump announced a series of tariff increases targeting various nations, including key US allies such as the UK and the European Union.

Getty Images

Trump’s tariffs hit global markets, Starmer warns of 'economic impact'

The UK and other global economies reacted on Thursday to US president Donald Trump's newly imposed tariffs, with prime minister Keir Starmer warning of an “economic impact” from the 10 per cent levy on British exports.

Trump announced a series of tariff increases targeting various nations, including key US allies such as the UK and the European Union.

Keep ReadingShow less
Airbus bets on Indian supply
base to scale up production

Guillaume Faury

Airbus bets on Indian supply base to scale up production

AIRCRAFT maker Airbus plans to significantly ramp up its annual sourcing of components and services from India to reach $2 billion (£1.54bn) by 2030, its CEO Guillaume Faury has said.

Describing India as one of the most important markets for Airbus in terms of growth, Faury said the challenge for the aircraft maker is to support the speed of the growth of the aviation industry in India.

Keep ReadingShow less
nintendo switch 2

The new console aims to build upon the success of its predecessor while introducing fresh innovations

Getty

Nintendo unveils Switch 2 - A new era for hybrid gaming begins

After months of speculation and cryptic teaser campaigns, Nintendo has officially announced the highly anticipated successor to its bestselling hybrid console. The Nintendo Switch 2 is set to launch on 5 June, with a price tag of £395.99 for the base package and £429.99 for a bundle including Mario Kart World. With a range of hardware improvements, redesigned controllers, and an exciting lineup of games, the new console aims to build upon the success of its predecessor while introducing fresh innovations.

A Bigger, Sharper Display and 4K Support

One of the most noticeable upgrades in the Nintendo Switch 2 is its display. The console now features a larger 7.9-inch screen, boasting twice the pixel count of the original Switch and supporting full 1080p resolution. Additionally, the display is capable of up to 120 frames per second, ensuring smoother animations, while high dynamic range (HDR) enhances colour contrast for a richer visual experience. Despite these improvements, the Switch 2 maintains the same thickness as the original model, preserving its signature portable form factor.

Keep ReadingShow less