Jio and Airtel May Need to Cough Up to Rs 14000 Crore Due to This

On Monday, the Supreme Court said that the entry fees as well as variable annual license fees under the Telecom Policy 1999 will be treated as capital expenditure. Delhi High Court in 2013 had determined that the annual license fees would be treated as revenue expenditure.

Highlights

  • Bharti Airtel and Reliance Jio, two leading Indian telecom operators could see tax demand from the authorities of up to Rs 14000 crore.
  • The situation could arise due to the latest judgement from the Supreme Court of India.
  • Note that the Supreme Court recently deemed that the license fee paid by the telcos is capital in nature.

Follow Us

jio and airtel may need to cough

Bharti Airtel and Reliance Jio, two leading Indian telecom operators could see tax demand from the authorities of up to Rs 14000 crore. The situation could arise due to the latest judgement from the Supreme Court of India. Note that the Supreme Court recently deemed that the license fee paid by the telcos is “capital in nature”. This means that the telcos can’t treat it as a revenue expenditure anymore and will have to treat it as a capital expense.




Also, it is worth noting here that the Supreme Court has not cleared its position on whether this provision will be applicable on a retrospective basis or not. But given the order from the apex court, the tax authorities could jump into action and ask the telcos to clear the shortfall in tax payments for the prior period, along with applicable penalties, said Kotal Institutional Equities (via thehindubusinessline).

If retrospective tax is put on Airtel and Jio for 2020-23, then according to Kotak, the telcos would have to pay Rs 6000 crore (Airtel) and Rs 8,400 crore (Jio), respectively.

Read More - Jio Adds Users in Rural India in July, Others Lose

What is the Supreme Court Decision that is Causing Worries for the Telcos?

On Monday, the Supreme Court said that the entry fees as well as variable annual license fees under the Telecom Policy 1999 will be treated as capital expenditure. Delhi High Court in 2013 had determined that the annual license fees would be treated as revenue expenditure. But this recent decision from the Supreme Court now sets aside the ruling from the Delhi High Court.

Read More - Jio and Airtel Continue to Add Subscribers in July 2023: TRAI Data

If the retrospective tax comes into play, then it would mean a significant one-time impact on the finances of the telcos. However, Kotak believes that in the long term, the impact would reduce as the license holding period is quite long for the telcos.

Reported By

Editor in Chief

Tanay is someone with whom you can chill and talk about technology and life. A fitness enthusiast and cricketer, he loves to read and write.

Recent Comments

TheAndroidFreak :

I wish Lava Agni 4 uses Dimensity 8200.

OnePlus 13 and Xiaomi 15 to Feature Qualcomm Snapdragon 8…

TheAndroidFreak :

Efficiency is through the roof. Performance is close to snapdragon 8 Gen 3. That's what matters. I guess for next…

OnePlus 13 and Xiaomi 15 to Feature Qualcomm Snapdragon 8…

Faraz :

Yeah, also B40 of Airtel don't reach our home in 4G, so it was expected that n78 won't reach either.…

BSNL Deploys 1111 BTS in Bihar Under 4G Saturation Project

Faraz :

DoT should at least allot those spectrum permanently which BSNL is deploying now. If DoT takes back n78 spectrum then…

BSNL Deploys 1111 BTS in Bihar Under 4G Saturation Project

SCKPA :

Is the 4g site started again? At our location after 5 days it restarted.

BSNL Deploys 1111 BTS in Bihar Under 4G Saturation Project

Load More
Subscribe
Notify of
1 Comment
newest
oldest most voted
Inline Feedbacks
View all comments