Bharti Airtel slapped with Rs 1,067 cr tax demand

The Income Tax Department has slapped a Rs 1,067-crore demand notice on telecom giant Bharti Airtel for non-payment of Tax Deducted at Source (TDS) dues in the last four financial years. This is in connection with its overseas operations. The company called this demand unjustified and said that it would take appropriate legal recourse.

The I-T department has asked the company to pay a total tax of Rs 1,067.24 crore under sections 201 (consequences of failure to deduct or pay taxes) along with 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 and we will take appropriate legal recourse," a company spokesperson said.

The payments, which the department said are to be made immediately, are for four financial years-- 2007-08 (Rs 202.07 crore), 2008-09 (Rs 329.913), 2009-10 (Rs 313.577 crore) and 2010-11 (Rs 221.681 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 sources, held that such payments are in nature of fee for technical services and are subjected to TDS deductions as per section 195 of the I-T Act.

The department, in its notice, also said that for payments of such taxes, the location of the company's property or place of conducting the operations is not "relevant".

Bharti Airtel offers a variety of telecom services both in India as well abroad.

The company claims to have a subscriber base of over 230 million across 19 countries. Bharti has a sizeable operation in Africa after its $10.7 billion acquisition of Zain Telecom in 2010.