Govt to further deliberate on tax demand against MTNL

Government has decided to further deliberate on the issue of tax demand against loss-making MTNL, which had arisen due to a decision to provide pension support and refund of broadband spectrum payments to the state-run telecom firm.
MTNL has already made this payment of Minimum Alternate Tax (MAT), amounting to Rs 492 crore, and had sought relief from the government, which holds 56.25 per cent stake in this publicly listed firm.
"Cabinet considered MTNL issue. We have taken a call on it. There was a tax demand and we have accepted that. The loss to MTNL was because of book value. We have not deferred the matter, but further deliberations are required," Telecom Minister Ravi Shankar Prasad told reporters after a Cabinet meeting this evening.

Government in September last year decided to refund about Rs 5,700 crore to MTNL which it has to pay for wireless broadband spectrum in Delhi and Mumbai in 2010.
In December 2013, the government also approved pension support to MTNL for about 43,000 employees who joined the state-run firm from Department of Telecom.
This led to infusion of an additional amount of about Rs 1,500 crore (including interest) into MTNL as refund from government for the pension paid by the company to its staff.
On account of these decisions, MTNL earned a book profit of Rs 2,348.49 crore for the FY 2013-14, resulting in a minimum alternate tax (MAT) liability of Rs 492.26 crore.

The company was asked to pay the tax amount and government assured to consider refund of MAT after payment is made.