The income tax department has slapped a Rs 1,067-crore (Rs 10.67 billion) demand notice on telecom giant Bharti Airtel for alleged non-payment of Tax Deducted at Source (TDS) dues in the past four financial years in connection with its operations abroad.
Disputing the demand, the company said it would take legal recourse. The department has alleged a breach of sections 201 (consequences of failure to deduct or pay taxes) and section 195 (any person responsible for paying to a non-resident) of the I-T Act.
"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," a company spokesperson
said.
The payments, which the department said are to be made immediately, are for 2007-08 (Rs 202 crore), 2008-09 (Rs 329.9 crore), 2009-10 (Rs 313.6 crore) and 2010-11 (Rs 221.7 crore), in lieu of payments made by the company to "non-resident mobile service providers".
The international taxation unit of the department has, according to officials, held that such payments are in the nature of a fee for technical services and are subject to TDS deductions in line with section 195. Officials also said they were assessing similar transactions by other telecom operators, to check any tax evasion.
The department notice also said that for payments of such taxes, the location of the company's property or place of conducting the operations was not relevant. Bharti Airtel says it has a subscriber base of 230 million across 19 countries.
Disputing the demand, the company said it would take legal recourse. The department has alleged a breach of sections 201 (consequences of failure to deduct or pay taxes) and section 195 (any person responsible for paying to a non-resident) of the I-T Act.