Bharti Airtel slapped with Rs1,067-crore tax demand

The income tax department has slapped a Rs1,067-crore tax demand on Bharti Airtel's overseas operations for the last four years, saying the company failed to deduct tax at source.

The I-T department said Bharti Airtel is liable to pay total tax amounting to Rs1,067.24 crore under sections 201 (consequences of failure to deduct or pay taxes) along with section 195 (any person responsible for paying to a non-resident) of the I-T Act.

The company, however, said it was fully compliant with all the provisions. ''The demand notice, pertaining to applicability of withholding tax on payments made to international operators, is not justified,'' it said adding, the company will take appropriate legal recourse.

The I-T department has demanded immediate payment of tax dues for four financial years, including Rs202.7 crore for the financial year 2007-08, Rs329.91 crore for 2008-09, Rs313.57 crore for 2009-10 and Rs221.68 crore for 2010-11 in lieu of payments made by the company to "non-resident mobile service providers".

The payments are in the nature of fee for technical services and are subjected to TDS deductions as per section 195 of the I-T Act, according to the international taxation unit of the department.

The department also said the location of the company's property or place of conducting the operations is not "relevant" for payments of such taxes.