No withholding tax on discount on prepaid SIM cards, recharge vouchers: Supreme Court

MUMBAI: In a recent ruling, the Supreme Court (SC) clarified that discounts given on the print price of prepaid SIM cards and recharge coupon vouchers by telecom operators to distributors will not trigger withholding tax obligations under the Income-tax laws.

The SC’s decision, which came in a batch of appeals with Bharti Cellular as the lead case, settled a controversy that had seen conflicting judgments from various high courts. The SC laid out a four-factor test to determine if an entity qualifies as an agent, emphasizing factors such as legal power to bind the principal, control over conduct, fiduciary relationship, and accountability to render accounts and receive remuneration.