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The Finance Ministry on Monday said Cairn Energy Plc is likely to pay close to $1 billion as capital gains tax on the $8.48 billion it expects to get from selling majority stake in its India arm to Vedanta Resources.
"This deal will attract a capital gains tax of 11.33 per cent," a Finance Ministry official said. Edinburgh-based Cairn Energy Plc is selling up to 51 per cent stake in Cairn India at Rs 405 per share to billionaire Anil Agarwal-controlled Vedanta Resources Plc.
Together with mandatory 20 per cent open offer, the acquisition will cost Vedanta $9.6 billion. London-listed mining firm Vedanta Resources said capital gains tax arising out of its proposed acquisition of stake in Cairn India will be paid by Cairn Energy Plc.
"Tax will (have to) be paid by Cairn Energy Plc at an applicable rate of tax on capital gains," a Vedanta spokesperson told PTI.
Edinburgh-based Cairn Energy Plc currently holds 62.37 per cent stake in Cairn India. Earlier, the tax department had sought $2 billion in taxes from Vodafone on the $11.1 billion deal it signed with Hutchison International in 2007.
However, Vodafone had said it is not liable to pay any tax in India. Currently, the tax department and I-T department is fighting a legal battle on this.