New Delhi: The government should clarify
taxation rules regarding payments made for acquiring spectrum
while working to resolve the issue of 3G spectrum allocation,
according to financial consultancy firm PwC.
"There is no specific provision in Indian tax laws
governing the deductibility of the payments made for acquiring
spectrum," a PwC report on the telecom sector said.
With the allocation of spectrum, especially 3G being an
issue of concern, rules governing the same in the taxation
laws also assume significance.
"Since, substantial amounts are to be involved for
acquiring spectrum, determining its deductibility becomes
critical," the firm said.
An issue which follows the dearth of tax laws in case of
spectrum is whether such payment is in the nature of capital
expenditure or revenue expenditure, the firm pointed out.
"If such expenditure is capital in nature, whether it
is eligible for depreciation? If such expenditure is revenue
in nature, whether the deduction thereof is allowable in the
year of payment or over the period for which the spectrum is
allotted," PwC said.
As per certain media reports, the finance ministry has
decided to allow the telecom operators to treat the bid amount
for acquiring 3G spectrum as an expense over the tenure of the
licence that is 20 years.
Telecom is currently the fastest growing market in the
world on account of monthly addition of 10-12 million mobile
subscribers who sign-up primarily due to availability of low
tariffs and low-cost handsets.
Companies looking to invest in the Indian telecom market
need to consider a number of tax issues. Overall tax rates can
be quite high, so careful tax planning is vital, the report
said.
PTI
First Published: Sunday, November 22, 2009, 13:52