Essar, which today exited from the joint venture Vodafone-Essar, may be asked to pay tax upon sale of a part of the equity due to capital gains accruing to the Indian firm.
According to sources, Essar may be asked to pay tax on 10.97% equity held by its Indian subsidiary in Vodafone-Essar.
Essar has 33% stake in Vodafone-Essar. Of this 22.93% is off shore (held by entities registered outside India) and no tax may be payable on this. The remaining 10.97% is held by Essar Communications (an Indian entity) and there will be a tax liability on this portion.
Sources said that 22.03% stake (off-shore) is valued at $3.8 billion and the remaining 10.97% is valued at $1.2 billion.
Vodafone today announced to acquire Essar's 33% stake for cash outflow of $5 billion.
