DoT changes licensing standards to ease financial burden on telecom industry

The DoT changed licensing standards to streamline the interest rate for deferred payment of license fees, a move that should ease the financial burden on the telecommunications industry and make it easier to do business.

The department will now charge 2% interest on top of the State Bank of India’s One Year Marginal Cost of Lending Rate (MCLR) for late payment of license fees or any other statutory fees and interest. will be composed annually.

Previously, carriers were required to pay 4% interest above the SBI’s one-year MCLR and the interest was compounded monthly.

“Any delay in the payment of license fees or any other royalty payable under the license beyond the stipulated period will incur interest at a rate which will be 2% higher than the one-year MCLR of the existing SBI at beginning of the exercise (ie April 1) with regard to license fees or any other fees relating to said exercise ”, specifies the amendment.

The Department of Telecommunications (DoT) also removed the license clause requiring telecommunications operators to pay a penalty equal to 50 percent of the partial payment they made for license fees. The penalty was imposed if the underpayment exceeded 10 percent of the license fees payable.

The amendment entered into force on October 1. The move is part of the telecommunications reforms announced by the government in September 2021.

The old rules were one of the main reasons for the stress of incumbents after the Supreme Court verdict on adjusted gross income which upheld the government’s position and asked telecom operators to pay ??1.47 lakh crore of statutory contributions.

Base contributions were approximately 26% while 74% of the total demand accrued due to interest on this amount, penalties and interest on penalty.

Telecommunications industry body COAI said the move would ease financial stress on the industry and make it easier to do business.

“We appreciate the step of streamlining the interest rates on the deferred payment of license fees (LF) and any other royalties under the license, removing penalties and penalty interest. We welcome this step to alleviate financial stress and promote the ease of doing business in the telecommunications industry, ”said IBOC Director General SP Kochhar.

This story was posted from an agency feed with no text editing. Only the title has been changed.

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