Indian Satellite Channels Uplinking From Hong Kong To Withhold Tax

by Mary Swire, Tax-News.com, Hong Kong

04 December 2002

Indian satellite television channels making use of transponder facilities hired from Hong Kong-based service providers may soon be obliged to withhold tax in India on the fees remitted for those services, according to a report in the Indian Economic Times this week.

The newspaper revealed on Monday that if a recent Income-tax Appellate Tribunal (ITAT) order against satellite provider, Asiasat Satellite Communication comes into effect, several Indian satellite channels, including the STAR stable of channels, Zee TV, and Zee Cinema will be affected.

The Economic Times reported that as the ITAT is only the second appellate authority on tax matters, the case is likely to run for many years, especially if SAR-based Asiasat decides to appeal before an high court. However, it revealed that:

'The immediate effect of this decision is that all TV companies operating in India using the transponder facilities of Hong Kong based companies will have to withhold taxes while making payment to these services.' This is expected to substantially increase operating costs for the Indian companies in question.

Speaking to ET, Shankar Narayan, the CFO of STAR TV revealed that:

'We are aware of the ITAT order. However, we have not yet received any official communication so far. Currently we are making all remittances to our parent company in Hong Kong. It is STAR Hong Kong that pays tax and other international payments. We are still studying the situation.'

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