Telecom Companies Required to Pay GST Alongside Spectrum Charge Instalments

Telecom companies will need to pay Goods and Services Tax (GST) along with their instalment payments for spectrum charges, according to a senior official.

The Department of Telecom (DoT) is set to conduct the next round of spectrum auctions on June 6, covering eight spectrum bands intended for mobile phone services. The base price for this auction is set at Rs 96,317 crore.

The spectrum, which will be assigned for 20 years, allows successful bidders to make payments in 20 equal annual instalments during the upcoming mega auction.

An official stated that telecom companies will need to pay GST at a rate of 18% with each instalment.

“The GST Council is expected to clarify the payment procedure for GST by companies winning the bids in the upcoming spectrum auction during its next meeting,” the official told PTI.

This clarification is anticipated to resolve any confusion among field formations about the method for GST collection in the auction process.

The auction includes all available spectrum 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 total frequencies being auctioned have a base price value of Rs 96,317 crore.

An expert noted that under GST law, spectrum payments fall under licensing services for the right to use other natural resources, taxed at 18%.

“Spectrum charges are paid in phases over time, so tax payments should also be staggered. The board should issue a clarification to prevent any potential litigation,” the expert explained.