Service Tax on Foreign Telecom Networks to Hit Cash Flows of IT, ITeS Firms

New Delhi: The finance ministry has said use of foreign telecom networks will be liable to service tax in India, dealing a blow to the cash flows of IT, IT-enabled services and telecom companies that may have to cough up past dues. The levy could also raise international telephony charges for domestic consumers, though telecom companies played down the impact. "Receiving International Private Leased Circuit service from abroad is chargeable to service tax under business support service," the Central Board of Excise and Customs said in response to clarifications sought by the industry on the use of foreign networks.