Telcos will pay GST along with their spectrum charge instalments

A senior official stated that telecom companies must include GST when making payments for spectrum charges in installments.

The Department of Telecom plans to conduct the upcoming spectrum auction on June 6, offering eight spectrum bands specifically for mobile phone services. The starting price for the auction stands at Rs 96,317 crore.

The spectrum will be allocated for 20 years and winners in the upcoming mega auction can pay in 20 equal annual installments. The official stated that telecom companies will need to pay 18 % of Goods and Services Tax (GST) on every installment.

According to the official, the GST Council is expected to explain the payment process for companies that win bids at the upcoming spectrum auction in its next meeting, as reported by PTI. The explanation will eliminate the uncertainty among field formations about how to collect GST in the auction procedure.

The auction includes all the spectrum accessible 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. The combined frequencies up for auction have a base price valuation of Rs 96,317 crore.

According to Executive Director Rajat Mohan of Moore Singhi, spectrum payment falls under licensing services for the right to use other natural resources under the GST law, which is taxed at 18 %. Payment for spectrum is spread out over time, resulting in staggered tax payments. Mohan suggested that the board should provide a clarification to prevent any litigation about this matter.