IT firms ‘falling foul of Indian tax systems’
Wednesday April 22, 2009
Businesses in the Indian IT industry are struggling with its VAT system, according to one industry expert.
An insider has told Silicon India that global IT companies have been falling foul of tax evasion rules, the latest of which occured when it was discovered that Oracle failed to pay Rs 230 crore (£31.3 million) of service tax over a period of five years.
IBM, SAP and Microsoft have all previously fallen foul of the rules, which the expert blames on the "wide variety of rules and ambiguity" in India’s tax system.
"As the industry is finding it hard to cope with the double taxation system that includes VAT and service tax, firms have the tendency to skip one of the taxes for a period," said the insider.
A lack of clarity and interpretation is leading to a lot of the controversies, he added.
The Reserve Bank of India recently announced it plans to issue Rs 5 and Rs 50 denomination bank notes with an inset E to represent the signature of its governor Dr D. Subbarao, the Central Chronicle reported.