PIL moved in HC seeking IT collection on BPO companies

Chennai, Feb 1 (UNI) A Public Interest Litigation (PIL) was today moved in the Madras High Court seeking to demand and collect Income Tax from Business Process Outsourcing (BPO) companies for their revenue earning activities in India.

A Division Bench comprising Chief Justice A P Shah and Justice K Chandru ordered notice to the Union Ministry of Finance and posted the matter to April two for further hearing.

The petition filed by an advocate Siva Shankar stated that BPO companies in were not paying income tax either in India or in the United States and As per the provision of the Income Tax Act, the corporate entity was liable to pay tax to the tune of Rs 36.59 per cent. Moreover, if the Centre had imposed this income tax on nearly 500 BPO companies registered with National Association of Software Services companies, it would have realised a revenue of approximately Rs 1,50,000 crore.

The petitioner also claimed that the approximate revenue earning for an Indian BPO Software firm was Rs 4,000 crore to Rs 5,000 crore per annum and the net profit before tax will be around Rs 1,000 crore to Rs 1,500 crore, and the liability for the single BPO would amount to Rs 370 crore to Rs 500 crore. The Ministry of Finance issued a circular on January 2, 2004, asking BPOs to pay tax. However, by another circular dated September 28, 2004, it withdrew the earlier circular, the petitioner added.

The petitioner contended that the authorities had failed to levy the income tax as per clear provisions in the Income Tax Act and withdrew all the circulars, which resulted in revenue loss and loss of economic growth.

UNI