India won't levy admin tax on 3G spectrum

NEW DELHI, INDIA:  India's telecom commission, the top decision-making government body for the sector, has rejected the regulator's proposal to levy an administrative charge on firms winning 3G spectrum in an auction due in January, a spokesman for the union telecoms ministry said on Saturday.

The commission has, however, stood by the higher annual spectrum fee proposed earlier by the government and also recommended by the Telecoms regulatory Authority of India (TRAI).

"The telecom commission has not found it possible to accept the TRAI's recommendations for an additional 2 percent administrative charge," Akshay Rout, told Reuters, without elaborating.

On Dec. 10, the regulator approved a government proposal to increase the annual spectrum fee for "standalone" 3G operators to 3 percent of their revenue, from 1 percent proposed initially.

Existing Indian operators, who already offer second-generation telecoms services and win 3G spectrum, will be charged between 3 and 8 percent of their revenue depending on the total spectrum held both for 2G and 3G services, it said.

On the top of the annual fee, the regulator had also recommended to levy an administrative charge of 2 percent of the highest bid for the 3G spectrum from the second year of spectrum allocation.

India has set a reserve price of 20.20 billion rupees ($427 million) for spectrum covering all of India for the auction, but bids are expected at much higher levels as the potential for telecoms services in the world's fastest-growing telecoms market remains huge.

Any additional fee levied on firms would deter interest in participating in the auction amid a global financial meltdown and tight liquidity, analysts say.

Firms willing to participate in the 3G spectrum auction have to send applications between Dec. 26 and Jan. 5, while the actual auction starts on Jan 16.