Need Tally
for Clients?

Contact Us! Here

  Tally Auditor

License (Renewal)
  Tally Gold

License Renewal

  Tally Silver

License Renewal
  Tally Silver

New Licence
  Tally Gold

New Licence
 
Open DEMAT Account with in 24 Hrs and start investing now!
Top Headlines »
Open DEMAT Account in 24 hrs
 CBDT extends due date for filing Form 10A/10AB for charitable and religious trusts up to June 30
 Tax saving options under New Tax Regime most taxpayers may not be aware of
 Will you save more tax by opting for the old income tax regime?
 You could lose section 80C tax benefit on EPF contribution; here's why
 Income Tax Return Filing: Why you should wait until June 15 to file ITR for FY 2023-24
 Section 43B of Income Tax Act: Expenses businesses can cover apart from payment to MSMEs
 Direct tax collections reflect disparities
 Dealing with income tax notices, intimations or letters? This new feature in ITR portal will make your life easier
 Income Tax Slabs FY 2023-24 & AY 2024-25 (New & Old Regime Tax Rates)
 How can Form 15G & Form 15H save TDS on interest income?
 How are e-filing and e-payment of taxes different? Know details here

Telcos set to face service tax audits
October, 16th 2006

Service tax audit of telecom companies may be on the cards, following concerns over the alarming slowdown in the growth of tax revenues from this sector. Service tax collections rose by a mere 4% in FY06, well below the growth in the telecom sector earnings.

Revenues of the telecom sector grew by around 17.6% to top Rs 92,000 crore ($ 20 billion) in FY06 compared to Rs 78,200 crore ($ 17 billion) in FY05, according to the Telecom Regulatory Authority of India (Trai). Service tax revenues stood at Rs 4,092.49 crore in FY06 against Rs 3,934.36 crore in FY05.

The Directorate General of Service Tax (DGST) has voiced concern over the meagre 4% rise in collections, looking at the buoyancy in the telecom sector.

An exercise is underway to pin down reasons for the modest growth, as a possible precursor to service tax audits. Some of the schemes such as free talk time offered to mobile users could come in for closer scrutiny, said official sources.
The mobile subscriber base has been growing at a scorching pace over the last few years. In FY06, there were 140 million telephone users, of which 93 million were mobile subscribers. The subscriber base of mobile phones grew by a robust 78% in FY06 and the growth momentum continues.

The rapid growth in mobile telephone subscriber base should normally translate into higher earnings for telecom companies, however, revenues may have been impacted as these companies have also slashed tariffs, reckons Sachin Menon, partner & head, Indirect Taxes RSM. The government is nevertheless concerned, given that collections from telecom services grew by 46% in FY05 and 71% in FY04 (see table). Telephone services account for over 93% of service tax revenues in the telecom sector.

The spurt in Cenvat credit is being cited as the main reason for the deceleration in collections.This system allows companies to take credit for the duty paid on inputs goods and services and use this to pay service tax on the final product. Simply put, companies do not have to pay cash.

Cenvat credit can be taken on select capital goods as well. Telecom companies have made huge investments in network expansion. In FY06, the capital investment for expansion was around Rs 27,600 crore ($ 6 billion) and this is projected to increase by 15%.

There could be instances where telecom companies may have used the Cenvat credit on capital goods that are not in the specified list. Service tax audits would reveal the correct picture, said an official.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2024 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting