Cairn India extends fall on Income tax notice, renegotiation of Rajasthan block

MUMBAI: Cairn India slipped over 4 per cent in intraday trade, extending losses for second straight session after the income-tax authorities issued a tax demand of Rs 20,495 crore for failing to deduct withholding tax on alleged capital gains made by its former parent Cairn UK Holdings.

The company on Friday said it will pursue all possible options to protect its interest.

The demand on Cairn India follows an order to Cairn UK Holdings earlier in the week. Cairn Energy, which had in 2011 sold majority stake in its Indian unit to mining group Vedanta for $ 8.67 billion, still holds a 9.8 % stake in Cairn India.

Meanwhile, the stock is also facing profit booking on reports that the government has directed the Directorate General of Hydrocarbons to renegotiate fiscal terms of Rajasthan oil block before its licence can be extended.

The company’s contractual term for exploring and producing oil from the Block expires in 2020. It has filed an application to extend the licence for another 10 years.