I-T department slaps Rs 1,067-cr tax notice on Bharti Airtel
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The income-tax department has slapped a 1,067-crore demand notice on Bharti Airtel, the country's largest telco by revenues and customers, for its alleged non-payment of Tax Deducted at Source (TDS) dues in the last four financial years in relation to its overseas operations.
Bharti Airtel said it was fully compliant with all the provisions and termed the demand unjustified even as the company said that it would take appropriate legal recourse.
The I-T department has asked the telco to make the payment immediately. It has been asked to pay up 202.07 crore for 2007-08, 329.913 for 2008-09, 313.577 crore for 2000-10 and 221.681 crore for the 2010-11 period in lieu of payments made by the company to "non-resident mobile service providers".
"Bharti Airtel 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," a company spokesperson said.
Executives aware of the tax notice said it related to roaming charges paid by Bharti Airtel customers when travelling abroad. When Bharti customers travel abroad and roam on the networks of say Vodafone, Telenor or any other foreign operator, the Indian telco pays these companies for the services.
The I-T department has said the company has to withhold TDS when making these payments to international telcos, an executive aware of the developments added.
The international taxation unit of the I-T department shares the view that these payments fall under 'fee for technical services' and are therefore subjected to TDS deductions as per Section 195 of the I-T Act. The department, in its notice, is also learnt to have said that for payments of such taxes, the location of the company's property or place of conducting the operations is not "relevant".
This marks the latest in a list of payouts the telco may have to make. Bharti may have to shell out over $1 billion if telecom minister Kapil Sibal approves his ministry's decision to charge incumbents for all 'excess' airwaves they hold beyond the 6.2 MHz limit.
ET had reported earlier this month that the telecom department plans to impose penalties totaling 1,594 crore on five mobile phone companies for allegedly understating revenues and hence paying lower revenue share during 2006-07 and 2007-08. The department has estimated that Bharti's share of this will be about 292 crore. (PTI)
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