The income tax department has sent notice to Reliance Jio Infocomm, a company owned by India’s richest man Mukesh Ambani. Tata Communications has also received the notice. The notices have been issued over interconnection usage charges. The two companies have appealed against the orders on the matter with the Commissioner of Income Tax (Appeals). Tata has also appealed against the notice.
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The income tax department says Indian telecom operators should deduct taxes at source from interconnection usage charges paid to foreign players. They demand this under Section 195 of the Income Tax Act. If the companies don’t do that, they are liable to pay the TDS amount with interest under Section 201 of the act that governs income tax in the country, reported Economic Times.
Interconnection usage charges is the money mobile operators pay to other mobile operators for carrying or terminating phone calls.
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The department reportedly believes that income tax is applicable as there is human intervention. The companies, however, believe that no charge is applicable as there is no human intervention and calls connect automatically. This issue has been a bone of contention for a long time.
The newspaper reported that notices have been sent for the financial year 2020. Section 195 of the income tax act deals with TDS on technical services and royalty paid to foreign companies.
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Tata Communications said in a statement that the company follows stringent standards of corporate governance. They have appealed against the notice.
Akash Ambani is the chairman of the board of Reliance Jio Infocomm Limited. His father Mukesh Ambani is the chairman of Jio Platforms, a company that owns all Jio services.
Akash Ambani and Shloka Ambani became parents to a daughter earlier this week.
