Cairn India shares slip as Income Tax Department slaps Rs 20,000 crore tax demand

MUMBAI: Shares of Cairn India Ltd fell by as much as 3.5 per cent as the Income Tax Department has slapped a Rs 20,495 crore tax demand on the company for allegedly failing to pay taxes on gains made by its former parent in a share transfer transaction about eight years ago.

The scrip ended the day with a loss of 3.46 per cent at Rs 225.70 on the BSE. During the day, it dropped 3.82 per cent to Rs 224.85.

At the NSE, shares of Cairn India settled at Rs 226, down 3.36 per cent from its previous close on the NSE.

In terms of volume, 3.18 lakh shares of the company changed hands at the BSE and over 27 lakh shares were traded at the NSE during the day.

Cairn India said it does not agree with the tax demand and will pursue all possible options to protect its interest.

In a regulatory filing, Cairn India said the demand comprises of Rs 10,248 crore in tax and the remainder Rs 10,247 crore in interest payout.

The tax notice comes days after Cairn Energy, the firm's former promoter, was slapped with a Rs 10,247 crore tax demand for an alleged Rs 24,500 crore worth capital gains it made in 2006 while transferring all its India assets to a new company, Cairn India, and getting it listed on the stock exchanges.

"Cairn India Ltd has received an order from the Income Tax Department today for an alleged failure to deduct withholding tax on alleged capital gains arising during 2006-07 in the hands of Cairn UK Holdings Limited (CUHL), our erstwhile parent company, a subsidiary of Cairn Energy Plc," the company said in a regulatory filing today.