Change in spectrum levy should maximise govt's revenue: FinMin to DoT

In fiscal year 2012-13, govt earned a total of Rs 5,689.88 cr from spectrum levy

The much-debated issue of spectrum usage charge (SUC), which is a percentage of a company’s revenue that it pays to the government annually as levy for the spectrum it holds, has taken a new turn.

The Department of Economic Affairs of the Ministry of Finance has told the Department of Telecommunications (DoT) that change in SUC can be made to “maximise” the Government’s revenue income from this source.

In fiscal year 2012-13, the government earned a total of Rs 5,689.88 crore from spectrum levy, an increase of about 10.5% from the Rs 5,148.05 crore earned during the previous fiscal year, according to DoT data.

In a recent communication to the DoT, the Department of Economic Affairs said SUC is a significant source of non-tax revenue to the Government exchequer, and any decision on this should be taken based on fiscal considerations as well.

Changes in pricing may be made to maximise the revenue realisation in order to create more fiscal space for achieving the various targets of the Government, it stated. If there is any reduction in revenue to the Government on account of changed pricing policy, there has to be “adequate justification” by some other way, such as user base, it added.

The matter of SUC is currently under discussion at the Telecom Commission, the highest decision making authority at the DoT, which is slated to meet on 25 January to take a decision on the issue.

Telecom Commission is likely to take the decision on 25 January itself as telecom operators have repeatedly asked for clarity on the matter before the next auction which will start on 3 February. However, companies that have submitted application expressing desire to bid may withdraw on or before 27 January.

The issue of SUC came under discussion after the Telecom Regulatory Authority of India (Trai) had, in September last year, suggested the adoption of a flat SUC at 3% of AGR of telcos, irrespective of their spectrum holding. However, an internal committee of the DoT has opposed the move, while the TC wanted to take a decision in consultation with the Department of Economic Affairs.

At present, telecom operators pay between 1-8% of AGR depending on their spectrum holding.

Broadband wireless access (BWA) spectrum holders like Reliance Jio opposed the recommendation as it would require paying only 1% of AGR as SUC. Incumbent GSM operators like Bharti Airtel, Vodafone India, Idea Cellular and Uninor have spoken in favour of the move.