International in-bound roaming – Service Tax applicable – CBEC
The Board clarifies that the Indian service provider providing the roaming facility to a visiting foreigner is liable to pay Service Tax. The Draft circular proposed in September 2006 is now finally issued.
Please see TIOL-DDT 450 15 09 2006.
Board clarifies that
++ during the period of roaming, the Indian telecom service provider provides telephone service to an international in-bound roamer.
++ This service to in-bound roamers is delivered and consumed in India and, therefore, it is not an export of service.
++ International practice treats the telephone service provided to an in-bound roamer by the visited network, for purposes of taxation, in the same manner as a telephone service provided to any home subscriber.
++ Accordingly, the domestic telecom operators providing roaming service to international in-bound roamers are liable to pay service tax on the amount received through the home network on account of service provided to such international roaming subscriber.
But the Board wants to collect this tax only from 15.1.2007. While this is a welcome step – to collect the tax from ten days after the clarification, the anti climax is – the past is an unsure terrain. Board is examining the issue and will eventually come up with a clarification.
While on this, DDT would like to remind the Board of two earlier Circular on the issue.
Service Tax Circular No. 22/2/97, dated 3-9-1997 in which Board had clarified that
the cell phone company with whom the subscriber is registered should collect the tax from the subscriber irrespective of the adjustment or sharing of the bills with other companies whose services are utilized by the subscriber while roaming. In view of the above it is clear that in case of plastic roaming facility, the home operator (home network), i.e., where the subscriber belongs to and who arranges roaming facility in other metro cities through the arrangements with the service operators (visiting network) should collect and pay the service tax.
While further clarifying the issue with regard to international roaming, Board had in Service Tax Circular No. 28/2/99, dated 4-6-1999, clarified that:-
In the case of International roaming the foreign visited network operator forwards the usage bills to the Home Network operator pertaining to the subscribers of Home Network operator who have made usage of visited network. On receipt of the usage bill from the foreign network operator the Home Network operator includes the said amount and roaming surcharge in the regular monthly bill of the subscriber. As the value of taxable service under Section 67(b) of the Finance Act, 1994 as amended is the gross total amount charged by the telegraph authority (here Home Network operator) from the subscribers, the Board is of the view that the service tax shall be chargeable on the comprehensive (gross) bill raised by Home Network operator on its subscribers inclusive of foreign usage bill and roaming surcharge.
Accordingly it is held that the Service Tax Circular No. 22/2/97, dated 3-9-1997 would not only apply to plastic roaming facility but also apply mutatis mutandis to automatic roaming facility including International Automatic/plastic roaming facility provided by Cellular phone operators.
Isn’t the present circular contradictory to the two previous circulars?
CIRCULAR NO. , Dated : January 3, 2007