By
Telecom Lead Team: Mobile major Bharti Airtel will approach the court against
the Rs 1,067 crore notice from the Income Tax department.
The
income tax department served a demand notice of Rs. 1067 on Bharti Airtel for
non-payment of TDS dues in the last four financial years on its overseas
operations.
Bharti
Airtel is already struggling with the costs of its African operations and roll out of 3G
services, and this notice could prove to a major setback to the company.
Bharti
earlier said that the operator is fully compliant on all applicable Income tax
provisions. This demand notice, pertaining to applicability of withholding tax
on payments made to international operators, is not justified and we will take
appropriate legal recourse.
Reacting
on the notice from the income tax department, Airtel replied that it would
appeal against the notice. The telecom contended that it has overseas operations
spanning over 19 countries. However, the IT department discarded the argument
saying that place of operations or company’s properties does not matter.
The
tax notice issued by the I-T department is related to roaming charges paid
by Bharti Airtel customers when travelling abroad. When Bharti customers travel
abroad and roam on the networks of foreign operators, the Indian telco pays
them for the services. The I-T department has said the company has to
deduct TDS when making these payments to international telcos, according to a
report in Economic Times.
The
IT department has asked the telco to pay up Rs 202.07 crore for 2007-08, Rs
329.913 for 2008-09, Rs 313.577 crore for 2000-10 and Rs 221.681 crore for the
2010-11 period in lieu of payments made by the company to “non-resident
mobile service providers.
According
to the international taxation unit of the I-T department, these payments fall
under ‘fee for technical services’ and are therefore subjected to TDS deductions
as per Section 195 of the I-T Act.
Recently, Airtel, along with Vodafone and Idea Cellular received notice from the telecom
ministry to stop their inter-circle and intra-circle 3G roaming agreements.
The
DoT said in an internal note that the roaming agreement among telecom companies
for 3G services would cause considerable loss of revenue to the government.
