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Telcos required to pay GST along with spectrum charges instalments

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In Short:

Telecom companies will have to pay GST along with instalments for spectrum charges in the upcoming auction. The DoT will hold the auction on June 6 for eight spectrum bands. The base price is set at Rs 96,317 crore. Successful bidders can pay in 20 yearly instalments. GST at 18% has to be paid with each instalment. The clarification on the GST payment process will be provided in the next GST Council meeting.

Telecom Companies to Pay GST on Spectrum Charges Instalments

A senior official has announced that telecom companies will now have to pay Goods and Services Tax (GST) along with the instalments paid towards spectrum charges. The Department of Telecom (DoT) is set to conduct the next round of spectrum auction on June 6 for eight spectrum bands meant for mobile phone services, with a base price of Rs 96,317 crore.

Spectrum Auction Details

The spectrum will be assigned for 20 years, with successful bidders allowed to make payments in 20 equal annual instalments. All spectrum bands, including 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz, 2,500 MHz, 3,300 MHz, and 26 GHz, will be part of the auction, totaling Rs 96,317 crore at base price.

Impact on Telecom Companies

Under the GST law, spectrum payment is considered as licensing services for the right to use other natural resources, attracting a tax of 18 per cent. The official mentioned that the GST Council is expected to clarify the procedure for payment of GST by companies winning the bids during the spectrum auction in the next meeting, aiming to end confusion among field formations and avoid potential litigation.

“Spectrum charges are payable in a phased manner over a period of time, and thereby tax payment shall also be staggered. The clarification from the GST Council will provide clarity on this matter,” said Moore Singhi Executive Director Rajat Mohan.

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