SC agrees to waive telcos’ interest on I-T dues on license fee

• The Supreme Court has given a major relief for telecom service providers, by waiving off interest due on income tax.

Highlights:

• Additional Solicitor General, appearing for the income tax department, had objected to the request. Contended that it was only logical for them to pay the interest if they were meeting the tax demand.
• The National Telecom Policy of 1994 was substituted by the new Telecom Policy in 1999.

Telecom Policy 1999

• The 1999 policy had stipulated that a licensee (telco) would be required to pay a one-time entry fee, and additionally, a license fee on a percentage share of gross revenue.
  • Such a payment has to be treated or characterized as capital.
  • Consequence of non-payment would result in ouster of the licensee from the trade.
• According to Telecom Regulatory Authority of India (TRAI),
  • India is currently the world's 2nd largest telecommunication market with teledensity of 85.11%.
  • Internet and broadband penetration in the country is increasing steadily, boosting the Government’s Digital India campaign and recently India has joined the race in 5G.
  • 100% Foreign Direct Investment (FDI) has now been allowed in the Telecom sector under the automatic route.

Prelims Takeaway:

• Radio Waves
• IT services