In-bound roaming likely to come under tax

Putting an end to the speculations on in-bound roaming charges, the finance ministry has stated that domestic telecom operators would have pay service taxes on international roaming services offered to visitors to the country. This would be effective to an international in-bound roaming from January 15, 2006.

However, for the period prior to the date, the matter is still under examination of the Central Board of Excise and Customs (CBEC).

"The 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," a circular from CBEC dated January 3, 2006, said.

CBEC falls under the purview of the department of revenue, that in turn, falls under the finance ministry.

It also stated that internationally, telephone services provided to an in-bound roamer by the visited network (for purposes of taxation), as considered as the same manner as a telephone service provided to any home subscriber.

The circular also clarified that in-bound roaming is not an "export service" as it is delivered and consumed in the country and hence revenues from it would not be treated as export revenues.

Cellular Operators' Association of India (COAI) secretary general T V Ramachandran said the circular was yet to reach industry circles and, hence, he could not comment on this.

The CBEC's circular is being issued in wake of a doubt raised on the applicability of service tax on international in-bound roamers under telephone services.

An industry source said that service tax was already being charged from in-bound international roamers since April 2006. The operators were charging 12 per cent service tax as part of the roaming tariffs from international roamers.

The industry is unlikely to raise any objections as it would not affect them seriously, and is likely to bring in more foreign revenues.