Supreme Court Grants Major Relief to Telecom Companies, Waives Interest on Income Tax Dues

In a significant development, the Supreme Court of India has granted substantial relief to the nation’s telecom companies, including Reliance Jio and Airtel, by waiving the interest on their outstanding income tax dues. This decision follows the Court’s October 2023 ruling that classified the license fees paid by these companies under the Income Tax Act as ‘capital expenditure’ rather than ‘revenue expenditure’.

Previously, under the National Telecom Policy of 1999, telecom companies were required to pay a one-time entry fee in addition to a license fee based on their annual turnover. This was a departure from the prior policy, where only a one-time license fee was required.

READ ALSO  Breach of Compromise Terms No Ground to Recall Quashing Order Under Section 482 Cr.P.C.: Supreme Court

The Supreme Court had previously recognized the one-time payments as ‘capital’ in nature, which significantly impacted the taxable income of these companies, increasing both their tax liabilities and accrued interest. However, in its latest ruling, the Court decided that it could not reclassify the annual variable license fees as revenue, thus providing a basis for the waiver of interest.

Video thumbnail

The telecom companies had argued that enforcing the previous decision would have drastically increased their taxable income, due to a sudden change in the treatment of these fees which had been in place for over 20 years. They had filed a petition in the Supreme Court to reconsider its decision.

Also Read

READ ALSO  Sec 160 CrPC | Can Police Summon a Person For Investigation Who is Residing Outside Territorial Limits of Station or Adjoining Station? Answers Delhi HC

The Court’s refusal in February to retract its earlier decision but its willingness to consider waiving interest accrued after 1999 provides a significant financial reprieve for the telecom sector.

READ ALSO  SC Grants Interim Protection from Arrest to Man Who Complained Against Influencer Sharmistha Panoli

Law Trend
Law Trendhttps://lawtrend.in/
Legal News Website Providing Latest Judgments of Supreme Court and High Court

Related Articles

Latest Articles