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

Tesco Clubcard Changes: Update Your App Before the Deadline

The digital Clubcard offers convenience and flexibility

Getty

Tesco Clubcard changes: Customers urged to update app before Monday deadline

Tesco has issued an urgent call for action to millions of its Clubcard users, advising them to update their Tesco Shopping & Clubcard app before Monday, 31 March 2025. The supermarket giant is rolling out an important update to improve data protection and online security, and failure to update the app by the deadline will leave customers unable to access their digital Clubcard benefits.

Update to ensure enhanced security

The upcoming changes are being implemented to enhance the security of customer data and improve overall protection. Tesco has highlighted the importance of this upgrade, as it seeks to safeguard customer information and keep their online shopping experiences secure.

Keep ReadingShow less
OpenAI Restricts ChatGPT’s Image Feature After Viral Ghibli Trend

Altman addressed the impact of the popular Ghibli-style image trend on OpenAI’s resources

Getty

OpenAI limits ChatGPT’s image generation feature amid viral Ghibli image trend

OpenAI CEO Sam Altman has announced temporary limitations on the company’s image generation feature in response to overwhelming demand driven by a viral trend. On Thursday, Altman addressed the impact of the popular Ghibli-style image trend on OpenAI’s resources, particularly its reliance on GPUs (graphics processing units). Altman revealed that the surge in demand for ChatGPT’s image generation tool has led to significant strain on the company’s infrastructure, prompting the introduction of temporary speed limits for users.

In a post on X (formerly Twitter), Altman shared the company’s response to the unexpected demand, stating, “It’s super fun seeing people love images in ChatGPT, but our GPUs are melting. We are going to temporarily introduce some rate limits while we work on making it more efficient. Hopefully won’t be long! ChatGPT free tier will get 3 generations per day soon.”

Keep ReadingShow less
UK-business-district-Getty
The Canary Wharf business district including global financial institutions in London. (Photo: Getty Images)

Economic growth in 2024 slightly higher than estimated: ONS

THE UK economy grew slightly more than first estimated in 2024, according to official data released on Friday, providing a small boost for the government after it revised down its growth forecast for 2025.

The Office for National Statistics (ONS) said gross domestic product expanded by 1.1 per cent in 2024, up from an initial estimate of 0.9 per cent.

Keep ReadingShow less
Sri Lanka posts five per cent GDP growth as it ends years of economic decline

Sri Lanka's president Anura Kumara Dissanayake

Sri Lanka posts five per cent GDP growth as it ends years of economic decline

CASH-STRAPPED Sri Lanka’s economy grew by five per cent in 2024, marking the first full year of expansion since its unprecedented meltdown in 2022, official data showed last Tuesday (18).

The last quarter of 2024 saw the economy expand by 5.4 per cent, bringing the full calendar year’s GDP growth to five per cent, compared to a contraction of 2.3 per cent in 2023.

Keep ReadingShow less
Donald Trump

Speaking from the Oval Office, Trump said, 'What we’re going to be doing is a 25 per cent tariff on all cars that are not made in the US.'

Getty Images

Trump imposes 25 per cent tariffs on foreign-built cars

US president Donald Trump has announced a 25 per cent tariff on imported cars and auto parts, escalating trade tensions with key partners.

The new duties take effect on 3 April and apply to foreign-made cars and light trucks, with additional levies on key auto parts set to follow within the month.

Keep ReadingShow less