New Delhi, May 11 (PTI): Hit hard by a retrospective tax, Cairn Energy plc of the UK has offered to pay 15 per cent of the Rs 10,247-crore principal tax amount in return for the government lifting a freeze on the 9.8 per cent shares it holds in its erstwhile subsidiary, Cairn India.

Cairn has written to the finance ministry saying it wants to take the latest offer by the CBDT of putting a stay on the outstanding disputed demand on payment of 15 per cent till such time that the case is disposed of, sources privy to the development said.

The income tax department had in January 2014 slapped a draft assessment order of Rs 10,247 crore tax on alleged capital gains Cairn made on the 2006 reorganisation of its India business.

Pending that, it froze the 9.8 per cent share Cairn was left with in Cairn India, its erstwhile subsidiary which it sold to Vedanta Group in 2011.

In February this year, the income tax department issued a final tax demand notice of over Rs 29,000 crore, including Rs 18,800 crore in back dated interest.

Sources said Cairn Energy wants to pay Rs 1,537 crore (15 per cent of principal amount of Rs 10,247 crore) during the pendency of the arbitration it has initiated against the demand. In return, it wants the stay on Cairn India shares to be lifted. It holds 18.41 crore shares of Cairn India, which at today's closing price of Rs 135.25 are worth Rs 2,485.69 crore. Cairn may be looking at disposing of these shares to fund its business plans.

The CBDT had on February 28 issued fresh guidelines on the process of grant of stay on a disputed tax demand. Under this, "The assessing officer shall grant stay of demand till disposal of first appeal on payment of 15 per cent of the disputed demand".

The company is, however, not keen on finance minister Arun Jaitley's offer in his budget for 2016-17 to waive interest and penalty if the companies paid the principal amount to settle the retrospective tax disputes.