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ISPs Can't Escape India's Expanding Tax Net

by Robert Lee, Tax-News.com, London

30 October 2001



The government has widened the service tax net to include around 120 Internet Service Providers in India after the Central Board of Excise and Customs (CBEC) decided to revise its tax guidelines to operations that provide 'online information and database access and retrieval.'

In a statement CBEC said: 'They normally charge customers on the basis of usage of time. They also provide lease lines on lumpsum payment basis. They are, therefore, liable to pay service tax on the amount charged from customers.'

However, the customs department has exempted ISP on inter-connectivity services taken up by another ISP. 'Interconnection of one ISP to another is a commercial and technical arrangement under which service providers connect their equipment, networks and services to enable their customers to have access to data informations ... Therefore, interconnection charges paid by one ISP to another are not liable to service tax,' explained the CBEC.


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