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Net telephony firms under tax scanner for violating government rules

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Several companies including Skype, Yahoo, MSN, Net2Phone and Google are currently under the government's scanner regarding payment of service tax since they have provided illegal Internet telephony services in India.

In this respect, the Director General, Central Excise Intelligence, has written to the ISP Association of India (ISPAI), directing it to furnish the local addresses and overseas offices of such Internet telephony service providers with details of revenues and major service receivers. A complaint was earlier lodged by ISPAI with the Finance Ministry's office and with the DoT, alleging that such international companies were providing Internet telephony services in India without a proper licence.

ISPAI had alleged that an ISP licence or a unified access services licence (UASL) is required to provide Internet telephony, which these firms do not have. Therefore, the conclusion can be made that the alleged offenders neither pay service tax (as there is no billing for such calls in India), or the 6% AGR or even the 0.75% of AGR to be paid as ADC. It has been pointed out by ISPAI that the offenders were also violating the security norms governing telecom licences. UASL and ISP licences have to ensure monitoring and surveillance, especially where international voice calls are involved in the backdrop of terrorist activities.

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