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Taxing times or relaxing: Telecom & IT
October, 06th 2008

Indias telecom sector is sending a clear signal of growth. If the advanced tax figures filed by the telecom companies is any indication of their performance, telecom sector is right on the growth curve. The advance tax amount for most of the companies has gone up this in the second quarter of this year.

Government-owned BSNL has earned the distinction of being the highest tax payer among telecom companies, followed by Bharti Airtel. In the first six months of the current financial year, BSNL has paid a total of Rs 660 cr, while the second highest advance taxpayer, Bharti Airtel, paid Rs 223 cr.

The other company falling in the high advance taxpayer bracket is Nokia that has paid Rs 150 cr till September 2008. The only company that has reduced the advance tax amount is Tata Teleservices. Last year, the company paid Rs 4.2 cr until September, and this year, the company has filed no advance tax.

This, however, doesnt mean that the company isnt growing. Advance tax is one of the parameters of judging the growth of the company. If your revenue increases, your tax payment increases.

However, if your capital investment increases, then there are chances that your profits might go down a bit, forcing you to pay less advance tax. This does not mean that the company is not growing. The company has invested money in its plan of expanding into the GSM segment as well, says Romal Shetty, director at KPMG.

Unlike telecom, IT companies are a mixed bag. Although companies such as Microsoft, Intel Technologies, Cognizant Technology and Cisco have increased the advance tax, the amount has gone down for most of the other companies.

This indicates a possible slowdown in the market. With the US economic slowdown, most of the ITeS companies are registering a decrease in their profits. This has a direct impact on their tax payments. Most of the companies are trying to hold back instead of paying right now, says a Bangalore-based IT analyst.

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