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: ACCOUNTING STANDARD :: list of goods taxed at 4% :: articles on VAT and GST in India :: TAX RATES - GOODS TAXABLE @ 4% :: empanelment :: due date for vat payment :: TDS :: VAT Audit :: VAT RATES :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARDS :: cpt :: form 3cd :: Central Excise rule to resale the machines to a new company
 
 
Service Tax »
  Getting the trade to align with GST is a challenge
 Getting the trade to align with GST is a challenge
 With GST launch, race against time to avoid sales tax upheaval across India
 GST to rate taxpayers, businesses on payment record, make ratings public
 7 major benefits of Goods and Services Tax
 100 Opening GST Profiles- Indirect Taxation- ALL Industries
 New Opening Sr. Manager-Indirect Tax For A Leading Power Company
 Tax Collected At Source Under GST Regime
 India's GST challenge makes Donald Trump's tax overhaul look easy
 What does GST hold for Indian youth?
 GST will help India move towards becoming a commercial union

Service tax on foreign telecom networks to hit cash flows of IT, ITeS firms
August, 10th 2011

The finance ministry has said use of foreign telecom networks will be liable to service tax in India, dealing a blow to the cash flows of IT, IT-enabled services and telecom companies that may have to cough up past dues.

The levy could also raise international telephony charges for domestic consumers, though telecom companies played down the impact. "Receiving International Private Leased Circuit service from abroad is chargeable to service tax under business support service," the Central Board of Excise and Customs said in response to clarifications sought by the industry on the use of foreign networks.

Most business process outsourcing, IT, ITES and telecom firms lease foreign networks to provide services abroad. They will now have to pay service tax on payments made to the overseas service provider. Although the service tax paid will be eligible for credit against the tax liability, experts say companies will face cash flow issues.

"Even though this would only have an impact on the cash flow as credit would be available on the tax paid, yet there would be huge interest costs for the past period, further pressuring IT and ITES companies already hit by the slowing developed economies," said Bipin Sapra, partner, Ernst & Young.

Leased circuits are covered under telecom services. But as per the Finance Act, a telecom service has to be provided by a person with a licence in India and since the service provider is located out of country he could not be taxed under the 'telecom services' head. The CBEC has now said that though the service cannot be taxed as a telecommunication service it will still be liable to tax under business support service.

However, experts say this service could not be brought under tax in this manner. "IPLC services are specifically covered by the definition of telecom services and are excluded from it as foreign telecom service providers do not have a licence under the Indian Telegraph Act and should not be classified under the Business Support Service which is a generic service category," Sapra said.

A telcom company executive said any move to impose service tax on international long distance calls would have minimal impact on big telcos that largely use their own infrastructure.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - We Bring IT. Offshore software outsourcing company. We use Global Delivery Model (GDM) and believe in Follow The Sun principle

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