The Income-tax (I-T) department has demanded Rs 10.67 billion from Bharti Airtel for alleged non-payment of taxes on revenues from international roaming. According to the IT department the company has not paid its tax deducted at source (TDS) dues related to its overseas operations in the last four financial years.
When Airtel customers travel abroad and roam on the networks of foreign operators, the Indian operator pays these companies for providing roaming services. According to the international taxation unit of the I-T department these payments to foreign operators fall under the category of ‘fee for technical services’ and are subjected to TDS deductions as per Section 195 of the I-T Act. Bharti Airtel, has been paying tax only on income which it retained from roaming charges.
The tax department has asked Bharti Airtel to pay up 2.02 billion for 2007-08, 3.29 billion for 2008-09, 3.13 billion for 2000-10 and 2.22 billion for the 2010-11. The payments are to be made immediately as per the notice issued by the department. The notice also states that factors like location of the company?s property or place of conducting the operations are not relevant for payments of such taxes.
The tax department is reported to be assessing similar transactions by other telecom operators, to check any tax evasion.
Meanwhile, Bharti Airtel claims to be in full compliance with all applicable income tax provisions. It has termed the demand from I-T department as unjustified and has decided to seek appropriate legal recourse in this regard.
This development adds to the list of payments that Airtel may have to make to the government under different situations. Bharti may have to pay $1 billion, if the government considers the proposal to charge incumbents for additional spectrum beyond the contracted 6.2 MHz limit. Further, as per the recent media reports, DoT is all set to impose penalties totaling Rs 15.94 billion on five telecom operators for allegedly understating revenues during 2006-07 and 2007-08. Bharti’s share is estimated at Rs 2.92 billion.
Bharti Airtel is India?s leading telecom operator with a subscriber base of 17.47 (as of November 2011) and is present across 19 countries.
