Mar. 4 – Telecommunications companies with 3G services will no longer be allowed to avail of tax breaks found under Section 80 IA of the Income Tax Act.
The tax breaks under Section 80 IA are given to companies building infrastructure. In the telecommunications sector, companies can choose a 10 year period out of the first 15 years of operations to qualify for the tax benefits.
Companies can choose to avail of a 100 percent exemption on taxable profit in its first five years and a 30 percent exemption for the next five years.
The government will not give 3G companies the same tax benefits on the basis that the auction is for the allocating spectrum, not including new licenses. Tax breaks under Section 80 IA will only be available for companies beginning their services prior to 2005 and operators launching up to 2010 will not qualify.
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