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 ruled that they are not liable to deduct tax at source (TDS) on discounts given to their distributors on sale of SIM cards and recharge vouchers.

The order will also have a huge impact on all companies who employ distributors such as pharma and fast-moving consumer good, legal experts said.

The issue before the apex court related to the liability of the telecom service providers to deduct TDS under Section 194-H of the Income Tax Act on the amount which, as per the revenue authorities, was a commission payable to an agent by the assessee (telco) under the franchise/distributorship agreement between them.