India's Telecom Commission Rejects Attempts To Tax 3G

by Mary Swire, Tax-News.com, Hong Kong

29 December 2008

It has been revealed that India's telecoms commission has refused a proposal by the Telecoms Regulatory Authority to impose a 2% administrative tax on bids for bandwidth made by the country's 3G operators.

Under the TRAI's proposals, any companies winning 3G distribution in an auction to be held in January 2009 would be levied an additional 2% administrative annual fee on their bid.

The Department of Telecommunications (DoT) said that such a scheme would have a detrimental effect upon the amount of capital raised from sales of 3G spectrum at the auction, and the telecoms commission therefore rejected the TRAI's proposal.

Earlier this month, the telecoms commission raised 3G operating fees to 3% from the previous 1% on the advice of the government.

Under this decision, Indian operators who currently provide 2G services stand to be charged anywhere between 3% and 8% on the total revenue made from their services once they acquire 3G spectrum in addition to their existing 2G.

The 3G auction will take place on January 16, with applications to be made after December 26.

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