Expansion of definition [Explanation 6 to section 9(1)(vi)] of ‘process’ so as to include transmission by satellite, cable, optic fiber or by any other similar technology within definition of “Royalty” should be dropped as it is negatively impacting telecom sector and leading to:
(i) Non viability for Indian entrepreneurs to run such capital intensive projects due to rise in cost, as the overseas service providers (of roaming, bandwidth, etc.) would seek to shift their tax burden (TDS and Income-tax) to Indian players.
(ii) Increase in cost of basic amenities (like telephone, internet, electricity, cable charges etc.) to the general public at large and adding on to inflation.
In a bid to fuel the highly competitive and unnerved Telecom Industry as well as to bring in certainty, the government should clarify by way of insertion of a proviso or issue of a circular that Explanation 6 would not be applicable to any payments for telecom services including basic / mobile telephony, internet charges, roaming charges, interconnect charges, etc.