DoT amends telecom licensing standards to relax penal provisions


NEW DELHI: 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 above the State Bank of India’s one-year marginal cost of borrowing (MCLR) rate for late payment of license fees or any other statutory fee and interest will be compounded annually.
Previously, carriers were required to pay 4 percent 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 incumbents were stressed after the Supreme Court verdict on adjusted gross income which upheld the government’s position and asked telecom operators to pay Rs 1, 47 lakh crore of statutory contributions.
Base contributions were around 26 percent while 74 percent of the total claim accrued as a result of interest on that 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.


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