Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
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) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
 
 
 
 
Popular Search: Central Excise rule to resale the machines to a new company :: VAT RATES :: cpt :: ACCOUNTING STANDARDS :: TAX RATES - GOODS TAXABLE @ 4% :: due date for vat payment :: TDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: form 3cd :: ACCOUNTING STANDARD :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: VAT Audit :: articles on VAT and GST in India :: list of goods taxed at 4% :: empanelment
 
 
« News Headlines »
 How to respond to a tax notice under section 143
 Income-tax (22nd Amendment) Rules, 2017
 All about Exports under GST
 Have you missed the due date of filing your Tax Returns?
 What you should know about income tax refunds
 Income tax scrutiny to remain limited despite surge in returns filed
 Regarding Filing of online return for first quarter of 2017-18 extension upto 01-09-2017
 Deadline to file returns extended to 28 August for biz with transitional
 GST input tax credit form
  How to rectify income tax returns
 Govt extends tax exemption for industry in North East, hilly states

Taxman finds disconnect in interconnection TDS
March, 11th 2009

Some of countrys top telecom companies are being accused of deducting lower amounts of tax at source on payments made to each other for roaming and interconnection charges, but the companies deny any wrongdoing.

Interconnect charges, which include call termination fees, port charges and carriage fees, account for about 30% of the tariff charged to the consumer. Roaming charges make up 10-15% of operators earnings.

A number of telecom service providers had not been deducting the actual quantum of tax that they are supposed to, Central Board of Direct Taxes member (revenue) Saroj Bala told ET. She declined to identify the companies.The quantum of tax claimed by the authorities is not known.

The income-tax department is of the view that interconnection and roaming charges are in the nature of a fee for technical services, for which tax must be deducted at source at a 10% rate.

Interconnection charges apply when voice or data originating in the network of one operator terminates with a user after going through the network of another service provider, or when an independent long-distance operator carries the STD traffic of a telco. For instance, if a Bharti Airtel (originator) subscriber calls a Vodafone (network where call terminates) user, Airtel is liable to pay 30 p per minute to Vodafone as termination charge. Similarly, if a telco does not have a long-distance network to carry its STD traffic, it pays up to 65 p per minute to a third operator as carriage fee. Another component of the interconnect charge relates to port charges. Port is the point of interconnection between the networks of mobile operators.

Telcos have come under the I-T departments scanner because of the bill-and-keep practice followed by the telecom industry which leads to lower tax deduction at source (TDS), said another official in the tax department who did not wish to be identified.

The bill-and-keep model works like this: if, say, Vodafone bills Bharti Rs 100 as termination, carriage and port charges and Bharti, in turn, bills Vodafone Rs 80 for the same services, then both telcos do not make the complete payments to each other. Here, Bharti just pays the difference of Rs 20 to Vodafone. So, while telcos are liable to deduct tax on the total amount, tax authorities have found them deducting tax only on the difference, the netting off reducing the revenue that accrues to the government. In this case, instead of TDS on Rs 180, the netting off yields only Rs 20 on which TDS is levied, tax officials argue.

A Bharti representative said that the company had received notices in some circles from the I-T department but contended that interconnection and roaming services do not require any human intervention and, hence, cannot be classified as technical services. The companys contentions have been duly upheld by the Delhi High Court and similar views have been expressed by the Madras High Court in the case of Skycell Communication. The matter is pending with the Commissioner (Appeals), the representative said.
Representatives of Bharti as well as Reliance Communications claimed that deduction of tax for interconnection is being done on the gross amount billed and payments settled on net amounts.

An executive close to Vodafone Essar said the company had received a notice from the tax authorities in one of its circles, but declined to provide a further comment arguing that the issue pertained to the entire industry.
Reliance Communications and the Tatas said they had not received notices from the tax department.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Work Flow Workflow Software Software Automation Workflow automation Software Design Workflow Design Business Work Flow Workflow automation tools

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