In a move that could affect local mobile phone operators, India's Finance Ministry has proposed to levy service tax on roaming charges earned by them through tie-ups with international service providers.
'The local telecom operators providing international roaming service to in-bound roamers (foreigners using roaming service in India) are liable to pay service tax on the amount received through the home network on account of service provided to such international roaming subscribers,' a draft circular issued by the revenue department said.
For foreigners to use roaming facility in India, the local service provider assigns a temporary internal number and the call details are captured against this.
The billing details are then transferred to the international operator and the local mobile operator gets its share of the payment received from the subscriber.
The tax department is of the opinion that during international roaming, Indian service provider provides telephone service to a foreigner and the only difference is that the payment is not directly received from the subscriber but is routed through the home network.
'However, this does not alter the essential characteristics of service, which is of a telephone connection,' the draft circular said.