Tata Communications on Friday said that the Commissioner of Income-tax (Appeals) Mumbai, who was hearing the tax deduction at source (TDS) on interconnection usage charges, has passed an appeal against the company.
Tata Communication through a regulatory filing said, "The Commissioner of Income-tax (Appeals), Mumbai, passed orders received by the Company on September 07, 2023 deciding the appeals against the Company."
The company further added that on Friday it filed an appeal against these orders before the Income Tax Appellate Tribunal.
The Income Tax Department in June had asked both Tata Communications and Reliance Jio Infocomm for an explanation over the TDS on Interconnection Usage Charges payment. According to the income tax department the companies failed to deduct taxes at source from IUC in relation to the interconnection fees that were paid by the appellant to different telecom operators.
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The case was being heard by the Commissioner of Income-Tax Appeals, Mumbai and will cost Tata Communications Rs 228.49 crores as compensation. The appeals were for the financial year 2020 and involved section 195 of the income tax act.
What is IUC?
To those not aware IUC or Interconnection Usage Charges is the money that telecommunication service providers pay to other mobile operators for carrying or terminating its phone calls. While the department believes that the income tax is applicable as there is human interaction the companies feel that there should be no charge as there is no human interaction and the calls are automatically connected. This issue has been an issue between the companies and the department for a long time.
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