Tata Consultancy Services has not received any communication from the country's Income-Tax Department to fork out additional taxes, said the Chairman, Mr Ratan Tata.
“We have not received any such notice…there have not been any allegations of body shopping. You have nothing to be concerned about,” Mr Tata told shareholders at the 16th annual general meeting of the company, here on Friday.
It may be recalled that TCS' closest rivals Infosys and Wipro were under the scanner of the taxman in the recent past for what is often called “body shopping.” In separate communications to the companies, the Department had refused to acknowledge onshore services (services rendered by Indian staff on deputation to overseas markets) as software exports, thus making them ineligible for tax benefits.
In fact, Infosys was slapped with an Rs 450 crore fine for claiming tax exemption on onshore services. A recent media-report had said that even TCS was being scrutinised by the IT department on similar grounds.
Another issue
Another issue plaguing the IT industry currently is that of increased visa costs and difficulties associated with securing temporary work permits.
The issue was highlighted after Infosys recently received a subpoena from a lower court in the US asking it to provide sponsorship details of B1 visas. A US-based employee of Infosys alleged the Bangalore-based information technology services provider was misusing the visa programme to bring Indian employees to the US to work at clients' site.
CLSA in a report on the industry had that H-1B/L-1 visa rejection rates have doubled from 4 per cent to 8 per cent for larger companies with even higher rejection rates for smaller companies.
“While the near-term impact for Indian tech players could be lost revenue and higher sub-contracting costs, medium /long term impact could be in the form of higher onsite delivery costs and lower competitiveness in select cases,” CLSA had said.
However, Mr Tata had a different take on this issue. “We do not have a problem with visas…we are able to get visas for our operations,” he said in response to a shareholder query.
In fact, TCS was under the scanner of the US embassy last year, causing it to be suspended for three months from a programme that facilitates speedy processing of temporary US work visas for employees.
However, the company was later re-instated in the programme after it was determined that the alleged irregularities were due to a human error.