Archive · 5 Dec 2025
Vedanta Challenges Tax Dept's ₹1,308-Crore Avoidance Claim
Vedanta, a big mining and metals company, is in a legal fight with the Indian tax department.
The tax department says Vedanta used a company in Mauritius to get a lower tax rate on dividends, which saved them about ₹1,308 crore.
Vedanta says they did nothing wrong and that the Mauritius company was set up to help with a plan to take the company private and to raise money.
The court has told the tax department not to take any action until the next hearing.
This case is important because it could affect how other companies use tax treaties to save money.
Vedanta Ltd and its promoter entity VHML have challenged the income tax department's claim of a ₹1,308 crore tax avoidance advantage under the India–Mauritius tax treaty.
The tax department alleges that Vedanta used VHML to secure a 5% dividend tax rate instead of the applicable 10–15% rate, classifying it as an impermissible avoidance arrangement under GAAR.
The Delhi High Court has restrained the tax department from taking coercive action until the next hearing on 18 December 2023.
Vedanta argues that VHML was created for legitimate business purposes, including supporting the company's delisting plan and providing a fair exit opportunity to public investors.
The dispute centers on whether VHML was incorporated primarily to secure a concessional treaty tax rate after Vedanta's 2020 delisting attempt.
- Who
- Vedanta Ltd and its promoter entity Vedanta Holdings Mauritius II Ltd (VHML)
- What
- Challenging the income tax department's claim of undue tax advantage of ₹1,308 crore
- When
- The writ petition was heard on 4 December 2023, with the next hearing on 18 December 2023
- Where
- Delhi High Court
- Why
- Vedanta argues that VHML was created for legitimate business purposes, including supporting the company's delisting plan and providing a fair exit opportunity to public investors
- Company
- Vedanta Ltd
- Promoter Entity
- Vedanta Holdings Mauritius II Ltd (VHML)
- Alleged Tax Avoidance
- ₹1,308 crore
- Tax Liability Imposed
- ₹138 crore
- Court Hearing Date
- 4 December 2023
- Next Hearing Date
- 18 December 2023
- Dividend Tax Rate Under DTAA
- 5%
- GAAR Implementation Date
- 1 April 2017