Top Story

e4m_logo.png

Home >> International >> Article

PIL filed challenging the tax system for foreign channels

22-February-2001
Font Size   16
PIL filed challenging the tax system for foreign channels

The practice of charging foreign TV companies a normal tax rate on the presumptive profit of 10 per cent earned through advertisements in India has been challenged in the Delhi High Court through a public interest litigation, which maintains that the Income Tax Act already has provisions to estimate the incomes of nonresidents.

The PIL filed by advocate B L Wadhera has challenged two circulars by the Central Board of Direct Taxes — dated May 2, 1996 and April 15, 1998 — on the grounds that they have been issued solely to benefit the foreign TV companies.

According to the petition, the impugned circulars had caused a reduction in the rate of taxation for foreign TV companies from 55 per cent during the assessment years 1995-96 to 1997-98 to 48 per cent from 1998-99.

The effective rate, thus, worked out to 3.8 per cent for the years 1995-96 to 1997-98 and 3.3 per cent from 1998-99 onwards on ad revenues of the foreign TV companies. If calculated in terms of the normal rate of tax which was in force in those particular years.

Wadhera alleged that CBDT’s first circular was based on a presumption that ad agencies working for foreign channels were retaining 15 per cent of the gross amount earned by these companies, while their Indian agents were keeping another 15 per cent of their gross earnings. However, foreign channels which do not have an office in India operate only through agents, and were taking away the remaining 70 per cent of the revenue earned on advertising.

Tags

Vijay Mansukhani, speaks to exchange4media about the resurgence of Onida, the scope of growth of consumer electronics market in India and the reasons why Indian consumer electronics brands don’t compete on a global scale

Projjol Banerjea opens up about hiring Anne Macdonald and GroupM's Rob Norman, and the brand's new identity

Meera Iyer tells exchange4media that in FY 2016/17, bigbasket clocked a revenue of Rs 1,400 crore. The online supermarket currently stands at 70,000 orders a day, with operations in 25 cities.

CMO, Kashyap Vadapalli on the start-up’s marketing play, why it has decided to stay away from IPL and response to its furniture rental apps

Projjol Banerjea opens up about hiring Anne Macdonald and GroupM's Rob Norman, and the brand's new identity

CMO, Kashyap Vadapalli on the start-up’s marketing play, why it has decided to stay away from IPL and response to its furniture rental apps

The aim is to advance the company’s goal of simplifying its business and drive deeper service connectivity to its clients