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Internet Service Providers likely to be taxed - Views on News from Equitymaster
 
 
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  • Feb 22, 2000

    Internet Service Providers likely to be taxed

    Internet Service Providers (ISPs) such as Mantra Online, VSNL, MTNL etc are likely to come under the service tax net. This is part of the larger move to curtail benefits to software exports under Sec 80 HHE of the Income Tax Act.

    While the plan to bring software exports under the tax net would not be bad, one is not sure whether the same could be said of the government’s probable move to tax ISPs.

    As it is increasing the access to the Internet is the need of the hour since increasing use of the Internet could change the very way this country is governed. For instance, the Andhra Pradesh government plans to put its entire spending pattern including the amounts allocated to each village on the Internet. The Tamil Nadu government also plans to link all the villages to the Internet and offer a lot of government services on the Internet itself.

    Besides, ISPs could also use the television as the medium for the accessing the net. As it is competition is bringing down the prices for the consumer. This move would only help increase the cost for accessing the Internet. The other question would be as to the mechanism of the collection of the tax itself.

    However, the larger move as to bring the software companies in the tax paying category is not unwelcome. Infosys, one of the top software exporters has gone on record that they would only be too happy to contribute as a tax paying company. This move would also help distinguish between the genuine software exporters and those who use software exports as a tool for getting tax benefits.

     

     

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