Telcom co's to pay GST for spectrum fees; operators' costs may rise

New Delhi: Telecom companies will have to pay GST along with the instalments paid towards spectrum charges, a senior official said. The Department of Telecom (DoT) will hold the next round of spectrum auction on June 6 for eight spectrum bands meant for mobile phone services. The base price for the auction has been set at Rs 96,317 crore.

The spectrum will be assigned for 20 years and successful bidders will be allowed to make payments in 20 equal annual instalments in the coming mega auction.

The official said Goods and Services Tax (GST) will have to be paid at 18 per cent by telecom companies along with each instalment.

"The GST Council in its next meeting is likely to clarify the procedure for payment of GST by companies winning the bids during the spectrum auction," the official told PTI.

The clarification will end confusion among field formations regarding the method for collection of GST in the auction process.

All the available spectrum in the 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz, 2,500 MHz, 3,300 MHz, and 26 GHz bands are part of the auction.

The total frequencies being put under the hammer are valued at Rs 96,317 crore on base price.

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Moore Singhi Executive Director Rajat Mohan said under the GST law, spectrum payment is covered under licensing services for the right to use other natural resources on which tax is levied at 18 per cent.

"Spectrum charges are payable in a phased manner over a period of time, and thereby tax payment shall also be staggered. The board should issue a clarification in this respect so as to avoid any litigation in this regard," Mohan said.

Although the GST element is to be borne by the telcos, it is bound to add to the cost of providing service which ultimately is likely to be passed on to the customer in the form of higher tariff. When the GST component is uniformly applicable to all service providers, bearing part of it by competitive providers is an unlikely scenario too.

(With PTI inputs)