Voice chats may no longer be free of charge

Hindustan Times | ByArchana Khatri, New Delhi
Aug 22, 2007 12:15 PM IST

Google, Yahoo and MSN, which have been offering telephony-like facilities through their messenger software will very soon enter the service tax bracket, reports Archana Khatri.


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: When does a voice chat on the Internet become a telephone call?

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: When the taxman comes calling.

Consumer Internet giants like Google, Yahoo and Microsoft's MSN, which have been offering telephony-like facilities through their messenger software, may soon come into the service tax net, industry sources say.

Skype, an Internet voice call service owned by online auctioneer eBay, and portals, Google, MSN and Yahoo, which have not been paying any levies for providing chats resembling long-distance telephony, provide their service for free. Once required to pay taxes in India, their services may no longer be available for free.

While reviewing the licence norms for Internet service providers (ISPs), the Telecom Regulatory Authority of India had recommended to the Department of Telecommunications in May this year that multinational service providers that provide telephony in India through their messenger services should be registered in India and be brought under the ambit of the service tax.

“We have been urging the government to ban them from providing the service illegally. Now they will at least pay the service tax and 6 per cent of annual gross revenue," Rajesh Chharia, President of the Internet Service Providers Association of India (ISPAI), told

Hindustan Times


Sources in Yahoo India told

Hindustan Times

that the Indian arm of Yahoo did not provide voice-based services through its servers (network computers) in India, and therefore it did not fall within the ambit of service tax and said it had no plans to get registered in India so far. MSN and Google India could not be reached. A spokeswoman for eBay said Skype was not registered in India.

The country's ISPs currently pay 12.36 per cent of their revenues as service tax. “Without lawful interception and call detail records (of non-Indian Internet firms), we will not be able to control the threat to national security,” said Charria.

The TRAI has also suggested an annual licence fee at 6 per cent of the annual gross revenue subject to a minimum of Rs 50,000 from Category A ISPs, Rs 10,000 from Category B and Rs 5,000 from category C. Category A ISP provide Internet services to the whole of India, Category B in the 20 territorial telecom circles and Category C within local district boundaries.

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