Relief for telcos: SC sets aside HC order on taxing sim card sale discounts

In a big relief to telecom companies, the Supreme Court on Wednesday set aside Delhi and Calcutta High Courts’ orders and said that Section 194H of the Income Tax is not applicable to them in this case.

The apex court allowed the appeals of Bharti Airtel, Vodafone Idea and others and dismissed the I-T department’s appeals.

The SC delivered its judgment on a batch of 40 appeals led by Bharti Airtel on applicability of TDS on discounts allowed to the pre-paid distributors on sale of SIM/ Recharge Vouchers.

The issue involved is whether a telecom service provider is liable to deduct TDS u/s 194H of the Income Tax Act since the relationship between the assessee and a distributor is allegedly that of principal to agent and that the payments paid by the assessee is commission as envisaged u/s 194H of the Act.