Indian ISPs Taxed for Generating "Light Energy"

CaptKeen writes, "The Hindu is reporting that the Indian Government is trying to tax optical broadband providers (think fiber to the premises) for generating 'light energy.' According to the Commercial Tax Department, optical broadband providers operate on light energy which is 'artificially created and sold to customers for the purpose of data transmission and information.' This classification would make Internet access goods (since you are buying light) as opposed to service — and would be subject to a 12.5% VAT."

I say tax the entire electromagnetic spectrum

[Anonymous Coward]

That will solve the deficit problem

Imperialism well taught

[jfmiller]

When the British empire controlled India, they levied a small tax on the production of all salt in the country. It was not that the government made much by this tax, nor was it that the people were burdened by it. But india ran on salt, and by taxing it the British controlled it. It was for this reason that Gandhi lead a march to the sea to do the very simple thing of making salt in oppisition to british rule.

When I read that a government that was created by the power and witness of such acts now wished to tax the production and transmission of light, It makes me wonder if they have even read their history.

JFMILLER

Re:How about...

[Kazymyr]

No no no...

They will tax the end users too for "generating and sending light power" themselves.

Re:Psst...

[OzPeter]

Yeah but the problem with electrons is that you aren't buying them. All you are doing is renting them. Once you have finished using them you send them back to the provider. So in that way photons *are* different.

I'm not sure of the Indian taxation system, but I would guess that a consumer is already paying the government for the privelage of getting electrons in the first place, which will then be used to turn the photons into useful information. This would smack of double taxation. But hey, the Australian government is happy doing this as we can pay government mandated GST on top of government mandated stamp duty.

EE 101

[955301]

Nevermind that the photons don't go past the first repeater. Was anyone else reminded of when California tried to apply annual property taxes on satellites in orbit?

Sometimes the principal that I hold so dear, that lawyers are the worst of all humans is tested by a group of legislators.

Re:The hell?

[negative3]

This article is inducing some serious cognitive dissonance for me. I find this article seriously disturbing.

Taking the taxman's position in this article, one could impose the VAT on cellular telephone providers as they are doing the same thing, exhanging money for a specially encoded form of electromagnetic radiation. That's right - the only difference between visible light and radio waves is the frequency. You can not hold visible light in your hand just as you can not hold any EM waves.

And FM radio gives their radiation away for free...must be communists or something

Thank you. Come again!

[ukemike]

Thank you. Come again!

Re:Wow

[ZWithaPGGB]

Like India REALLY needs more government interference and disincentive to investment.

When will people learn that you get less of what you tax more? Good news for all those US and European workers worried about losing their jobs to offshoring! India is shooting themselves in the foot.

Not Really...

[ackthpt]

This sounds reasonable and ingenious.

Insidious, maybe. But "Buying Light" suggests it's only unidirectional, what's really happening is you're exchanging light, with a net of 0.

Light is Free

[richardtallent]

The fiberoptic light energy is a *free* service, available to anyone without charge.

However, if you would like the ISP to modulate some well-timed *dark* spots in the line for the purposes of data transmission, *that* is going to cost you.

Since darkness (the absence of light) can't be defined as a product, no VAT.

Problem solved.

Re:Big Endian/Little Endian, 1/0

[Anonymous Coward]

Thanks. That's all clear now.

Re:Tomato

[Marxist Hacker 42]

No, actually, it's more like the US government reclassifying ketchup as a tomato and therefore giving schoolchildren their "daily requirement of vegetables" in public school lunches that consist of a corn dog, some ketchup, and potato chips.

In other words it makes no sense at all but they did it anyway (under Reagan).

Re:This may be an Indian "April Fools"

[SirTalon42]

By doing it this way they can claim that its not a new tax, it had just gone unnoticed, so you shouldn't blame them.

Electricity

[gebbeth]

Isn't the electricity used to generate the light already taxed?

Re:Wow

[Anonymous Coward]

100 million people dead by government action. That's progress!

Let's keep perspective....

[posterlogo]

...and not get all racist here and make fun of another country (after all, our politicians still think of dump trucks and series of tubes). They know it sounds dumb, but the purpose was to levy a tax, and they achieved that goal.

Re:This may be an Indian "April Fools"

[d3ac0n]

Actually, according to this page: http://www.nriol.com/resources/festivals/2006cal.a sp [nriol.com] October 10th 2006 is the Indian holiday of Karva Chauth. It's a fasting holiday that has nothing whatsoever in common with April Fools Day in the U.S.

Here is a URL for a full description: http://www.aryabhatt.com/fast_fair_festival/Fasts/ KarvaChauth.htm [aryabhatt.com]

So, as much as we might want to believe it, this isn't an Indian April Fool. They really ARE trying to enact this insanity into law.

I'm not sure if that makes it funny or sad...

Karnataka has Bangalored itself

[Clueless Nick]

This is one of innumerable instances where the bureaucracy (or an unbelievably numb part of it) will reclassify something at a whim and want to tax it. The motives are many - revenue to the exchequer, corruption, or just plain sadism.

You've got to meet some of these revenue officials to realize what absolute crud they are actually.

It should be clear to anybody having the slightest knowledge of business transactions and indirect taxation that the ISPs are not selling light energy, they are just providing data communication service. If we go by their logic, they would start levying VAT on the electrical charge in phone lines, microwaves for cellphones, radio waves, God knows what else.

And as the value of the 'goods' being sold is much higher than the input cost, namely electricity, the value added could be computed as a major chunk of the rental/data transmission charges unless allowed to be set off by connectivity expenses.

Oh well, not everyone in India has to worry about this, the tax is being assessed only in Karnataka, where Bangalore - and its most notorious, useless products are located. In a sense, it is moving forward quicker to the planned unification of VAT and Service Tax under GST. More power to you, o techie!

-clueless

Re:The hell?

[tchuladdiass]

I'd say the workaround for this is simple. It's just a biling item. The ISP would have the bill split into a service and product section. The product would be the light photons, charged at a flat rate of a dollar a month (or rupe, or whatever). The rest of the bill would be for the service of turning the light on and off. So only the "product" portion would be taxable.

Of course, then the ISP would get into trouble for the unfair practice of "bundling" one item (the service) with another (the photons), since the photons would have to be purchased from the same company.

Re:Light is Free

[joe 155]

I'm reminded of the old saying about how government works;

If it moves, tax it
If it keeps moving, regulate it
If it stops moving, subsidise it

They have just figured out that light is actually doing the first of these... expect regulation soon!

Taxes

[suv4x4]

Do you know the joke about "how come they didn't come up with tax for air?"

It's pretty old as well. There's no reason for a government owning your ass to stop at such trivial obstacles such as common sense and morale. It just has to be legal.

Coincidentally, what is legal is decided by the government. Man, I so wanna be in the next elections, come to think of it!

Re:This may be an Indian "April Fools"

[WoodstockJeff]

What difference does that make?

It can make a significant perceptial difference, if not a difference in how things actually pan out. Things like the REA (Rural Electrification Agency) tax are "hidden"; they're actually taxes levied against utilities, who then pass them through to us as part of those "federal taxes" listed on the bill. People don't care about taxes levied against evil utilities, even ignoring the fact that they're paying them indirectly. The so-called "Gore tax [cato.org]" was an increase in the "Universal Services" fee levied against the telcos when its mandate to "provide telephone service to rural areas" had its definition expanded to include "extended universal service support for any school, library and rural health clinic". When telcos announced that they planned on itemizing this extra levy on phone bills, the FCC went nuts. They didn't want it known just how big the bill was going to be, and still don't.

Even itemizing it as an income tax item is "safe", because people who work for others don't consider their gross pay to be a real number - only the net take-home pay means anything. There's a reason we have payroll withholding in this country - only the evil wealthy (anyone making more than $50K a year) realize just how much is being taken off their plates. Do factory workers really believe that the "employer share" of FICA and MED aren't coming out of their pay? Yes, they do, and the government wants it to stay that way.

Re:India already has service tax !

[indraneil]

I am an Indian as well. Allow me to point out that if the courts uphold the claim made by the Karnataka state govt, then we are looking at - 0.5% increase in taxability of a product whose usage is predicted to keep going up for as far as the Govt can see! - This is the Govt of Karnataka, which hosts India's powerhouse IT companies, and with a demography that is HIGHLY inclined to use this "commodity". This increase will be maximally beneficial for this one state - Other state govts would also want to join in the fun if they can, so they will have tacit support from other states as well What we need to know is whether this claim will be upheld in the court of law