Vodafone Served With Another Indian Tax Demand:

Vodafone has been issued with another tax demand from the Indian authorities, and given just 30 days to make the payment of nearly US$600 million.

The company says that the tax demand is not valid and it plans to appeal.

Vodafone's local customer service division, which provides services to the Group's companies around the world was issued with the Rs3700 crore (US$591.4 million) tax demand from the Income Tax Department. The amount includes interest from when the I-T Dept claims that the tax was due.

The assessment is for the year 2008-09 and follows an earlier draft transfer pricing order that sought to add Rs 8500 crore to the company's taxable income.

Transfer pricing is the method that subsidiaries within a Group charge each other for services. Divisions are required to bill each other for services based on fair pricing as if operating in an open market to avoid distortions and tax avoidance.

"Vodafone maintains that there is no tax payable on this transaction and the company will file an appeal before the tax appeal tribunal as soon as possible," the company told the Economic Times newspaper.