Supreme Court ruling gives telcos around ₹3,000 crore of savings
NEW DELHI : Telecom service providers including Bharti Airtel, Vodafone Idea and Tata Communications are set to save about ₹3,000 crore following a Supreme Court order released on Sunday. The apex court has waived off the interest levy on tax arising from its October 2023 ruling that said annual licence fees paid by telcos would be treated as capital expenditure, which are not tax deductible. The SC had overturned a 2013 Delhi High Court ruling that had said licence fees comprised revenue expenditure and were not taxable.
While the tax will still have to be paid, the interest component on the tax has been waived off by the Supreme Court in its latest order. That is significant, considering that the interest portion would have been higher than the tax demand, since the tax outgo on licence fee would be calculated since 1999, when the new telecom policy was issued, executives aware of the details said. “We have given our thoughtful consideration to the submissions advanced at the Bar.
We find that since the judgment of this Court is dated 16.10.2023, and having regard to the Telecom Policy, which commenced from the year 1999, the payment of interest for the period for which the tax demand is now to be met in respect of these cases stands waived," Justices B.V. and Ujjal Bhuyan said in the order seen by Mint. “This is a very good judgement which would reduce interest liability substantially for the industry.
A very welcome move and a huge respite," said Prashant Singhal, EY’s global telecom, media and technology leader for emerging markets. According to estimates, the interest would have been in the range of ₹3,000-3,500 crore, which would not be payable now. Following the October 2023 order, telcos had made provisions
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