Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: due date for vat payment :: cpt :: ACCOUNTING STANDARD :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT RATES :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: form 3cd :: ACCOUNTING STANDARDS :: TAX RATES - GOODS TAXABLE @ 4% :: list of goods taxed at 4% :: empanelment :: Central Excise rule to resale the machines to a new company :: TDS :: articles on VAT and GST in India :: VAT Audit
« News Headlines »
 ICAI to organise two-day international conference in Hyderabad
 Here's how to calculate tax payable on your capital gains
 Income Tax calculations for the financial year 2016-17
 CPE Events 17 October - 22 October 2016
 High Court raps I-T Department for wrong tax demand
  CBDT signs 5 advance pricing pacts with Indian taxpayers
 Finance ministry warns tax officials of action against GST protest
 Big changes for small units under GST
 Parliament’s winter session to begin on November 16 to expedite GST rollout
 Income-tax (27th Amendment) Rules, 2016 - 92/2016
 Announcement - Clarifications in Respect of MEF 2016-17

Double taxation and multiple levies hampering growth
February, 15th 2008

The telecom industry is overburdened with taxes. The industry is undergoing a rapid change and dealing with multifarious taxes and levies is cumbersome. The domestic telecom industry ends up paying a significant share of their total revenues towards different levies, compared with their counterparts in other Asian countries.

The two biggest issues surrounding the industry are of double taxation and existence of multiple levies which are hampering the growth of the industry. Both service tax and Vat are consumption taxes which are borne by the end consumers. Ostensibly, these taxes are intended to operate on a mutually exclusive basis. However, the problem is that there are no clear cut definitions in law of what constitute either goods or services. Equally, there are no overriding principles which can be applied in order to come to a determination on the point. Thus, it is entirely possible that what is a service under service tax law is equally goods under Vat law. Consequently, because of this lack of mutual exclusivity in terms of the underlying definitions of goods and services in the respective laws, a particular transaction can possibly be charged to both the service tax, as provision of services, as also the Vat, as a supply of goods.

Interconnectivity charges are payable between interconnecting operators for actual usage of each others networks, to originate, transmit, or terminate a call. Typically, a telecom service provider would make payments to foreign telecom operators for use of latters networks (for its out-roaming customers). One view is that use of network implies use of equipment or process and that payment for such use constitutes royalty taxable in India. Another view is that such payment is for use of a facility which does not constitute royalty. In such case, the payments received by the foreign operators are not subject to tax in India since they are for provision of services and do not involve any type of royalty payments as the term is defined in law. It is submitted that this aspect be clarified to avoid litigation.

The government is encouraging development of the telecom manufacturing facilities within the country and the availability of tax benefits under the SEZ policy.

Units established in special economic zones enjoy income tax holiday under section 10AA of the Income Tax Act for the profits earned in the unit in the ratio that the export turnover of the SEZ unit bears to the total turnover of the assessee.

A plain reading of the phrase total turnover of business of the assessee would result in a situation where the quantum of tax holiday may stand substantially reduced, since the total turnover is not restricted to that of SEZ Unit only. It is hoped that necessary amendment be brought in to avoid litigation on this important aspect.

Further, the rationalization of the multiple levies and introduction of a single levy on telecom revenue has been a long-standing demand of the telecom sector. The special committee, which was set up for examining the taxation issues in the telecom sector, has already submitted its report endorsing the industrys demands to the finance ministry. It is expected that the government would now address the concerns of the telecom industry.

The introduction of the single levy would result in a significant reduction in administrative costs and compliance costs. Further, single levy on telecom revenue will increase transparency. If the aggregate incidence of tax on this sunrise sector were to go down, it would be a very major boost for development.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Content Management System developers CMS developers Content Management Solutions CMS Solutions CMS India Content Management System India CMS development India Website CMS Website Content Management India Portal CMS India CMS Outsourcing CMS Vendor Complete CMS Custom CMS Services

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions