Indian Tax Authorities Target Global Internet Telephony Companies

Shouldn’t global Internet-based long distance telephone service providers pay service tax in India? That’s the question the Directorate-General of Central Excise Intel (NSDQ: INTC)ligence is asking itself. [via BusinessLine] And following protests of Internet Service Providers to the Department of Telecom that the Internet telephony companies were violating licence norms, the tax agency has asked local ISPs to provide details including address, revenues, and bulk users of all such net telephony service providers in the country.
Net telephony service providers such as Skype, Yahoo (NSDQ: YHOO), MSN, Net2Phone and Google (NSDQ: GOOG) have maintained that they were not liable to pay any charges to the Indian authorities since they were operating from other countries where they are paying necessary taxes as per local laws. But the ISPs, which obviously don’t have the low cost structure of the Internet telephony companies, allege that an ISP licence or a unified access services licence (UASL) is required to provide Internet telephony.