Revenue from communication services pegged at Rs 98,995 cr, govt to levy service tax on spectrum trading deals

Government expects revenue of Rs 98,994.93 crore from communication services in 2016-17, including proceeds from spectrum auction and other fees levied by the department of telecommunications (DoT).

The estimated receipts from communication services for next year is almost double of the revised estimates for the current financial year at Rs 56,034.35 crore. The government had earlier estimated revenue of Rs 42,865.62 crore in 2015-16. "The arrears of the previous years and receipts from fresh auction are also included in the Budget Estimates 2016-17," the Budget document said.

The government has clarified that a service tax on spectrum trading deals will be levied, which can be credited back, providing much needed clarity on spectrum trading deals. Finance minister Arun Jaitley said while presenting the Union Budget that assignment to right to use radio frequency spectrum will not be taken as a sale of intangible goods and therefore will be liable to service tax. " I propose to amend the Finance Act, 1994 so as to declare assignment by the Government of the right to use the radio-frequency spectrum and its subsequent transfers a service, to make it clear that assignment of right to use the spectrum is a service leviable to service tax and not sale of intangible goods," Jaitley said in his speech.

The DoT plans to commence the spectrum auction by June-July.  Telecom regulator Trai has already proposed a base price for sale of spectrum in seven bands through which the government can garner up to Rs 5.36 lakh crore.