Financial Daily from THE HINDU group of publications
Monday, Feb 10, 2003
Financial Daily from THE HINDU group of publications Monday, Feb 10, 2003 |
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Industry & Economy
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Radio/TV Presumptive tax regime sought for foreign telecasting cos Our Bureau
NEW DELHI, Feb. 9 THE Indo-American Chamber of Commerce (IACC) has suggested modification in the tax structure applicable to foreign telecasting companies (FTCs) in India with a view to making their operations feasible in the country. IACC, in its pre-Budget memorandum submitted to the Government, has said that a presumptive tax regime should be re-introduced in the Income-Tax Act to bring about uniformity and certainty in the taxation of various FTCs. Accordingly, a deemed profit rate could be determined based on an average of the worldwide profit rates of FTCs. According to the IACC President, Mr Vinod Chandok, taxability of FTCs in India has been a subject matter of considerable litigation. Owing to the nature of their business, it is very difficult to determine the amount of revenue generated by FTCs attributable to India. Earlier, the assessing officers used to tax FTCs arbitrarily by assuming a certain portion of their advertising revenues generated by FTCs in the country. With a view to ending the hardships caused to the FTCs, the Central Board of Direct Taxes (CBDT) fixed a formula for determining their income taxable in India. For FTCs which did not have a permanent establishment in India and did not maintain books of accounts in the country, the presumptive income was determined at the rate of 10 per cent of the gross revenues and accordingly taxed at that rate. However, the CBDT withdrew that circular with effect from March 31, 2001. From financial year 2001-02, the taxability of a FTC is no longer determined on a presumptive basis. Instead, it is taxed in accordance with the normal provisions of the I-T Act. This, IACC feels, will lead to undue litigation and delay finalisation of the ultimate tax liability. To steer clear of the path of litigation and to bring in equity and certainty in the tax liability, it is necessary to restore the presumptive tax regime for the FTCs, the chamber has argued.
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