US-based technology major IBM is contesting a claim of the revenue department which has increased the company's taxable income substantially to around Rs 11,000 crore (Rs 110 billion).
New Delhi is also set to top its target of raising at least $13 billion.
The move came as the country badly needs capital inflows as the rupee comes under pressure
Cairn joins a slew of multinational firms including Vodafone Group Plc and Royal Dutch Shell Plc that have been slapped with retrospective tax demands by Indian authorities.
Vodafone is facing tax liability over its $11 billion acquisition of a 67 per cent stake in the mobile-phone business owned by Hutchison Whampoa in 2007.
Cairn files notice against India in $1.6 billion tax dispute.
IBM, Nokia Oyj, Microsoft cases could now be resolved
The investment was committed to by Vittorio Colao, CEO of Vodafone Group Plc.
Transfer pricing tax orders of Income Tax against Shell and Vodafone pertain to alleged undervaluation of shares issued by their domestic subsidiaries to the parent companies abroad.
The entry of the deep-pocketed conglomerate is expected to heighten competition.
CBDT circular issued last month had raised multiple taxation concerns.
Finance Minister Arun Jaitley, in his Budget speech on Monday, announced a new dispute resolution mechanism for such companies who are in confrontation with the taxman's action.
Sensex climbs higher at close, bluechip stocks in focus.
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