Service tax, GST added to AGR dues

Another hammer has been put on Telecom companies as the tax authorities have started sending out notices for service tax and goods and services tax (GST) on the unpaid AGR dues. “Field formations have started reaching out to telcos, demanding that service tax on the service provided be paid up on top of unpaid AGR dues,” one of the officials said. another official said that those companies who are going to get shut and undergoing insolvency are also getting notices. “Prior to introduction of GST, service tax was payable under reverse-charge mechanism on such charges by telecom companies,” said Rajat Bose, partner at law firm Shardul Amarchand Mangaldas. “The levy of service tax at the rate of 15% on AGR dues will be a cost outgo for telcos since they may not be eligible to avail cenvat credit of such service tax.”

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