Indo-Dutch pact doesn't cover tax, says FinMin

The income tax department has rebutted Vodafone's notice under a Bilateral Investment Promotion and Protection Agreement (Bipa), saying the pact between India and the Netherlands did not cover taxation, an official source said.

The response to the Bipa notice was sent after the Cabinet turned down the revenue department's proposal seeking to withdraw a conciliation offer. This was after Vodafone pressed for including a transfer pricing case in its ambit and carrying negotiations only under the UN Commission on International Trade Law.

The Cabinet, however, has left a window open by not withdrawing the Vodafone conciliation talks for settling a Rs 20,000-crore tax dispute until a separate case over transfer pricing is settled by a tribunal.