News Roundup: Qualcomm gets BWA license
After an 18-month delay, the department of telecommunications (DoT) has issued an internet service provider (ISP) licence to US-based chipmaker Qualcomm, which will pave the way for the company to go ahead with the launch of broadband wireless access (BWA) services.
Qualcomm had won BWA spectrum in four circles – Delhi, Mumbai, Haryana and Kerala – for about Rs 4,900 crore in the auction held by the government in June 2010.[source]
Weak royalty law can lead to fresh tax burden on software cos like Microsoft, GE, Samsung
Microsoft, GE, Samsung, HP and Sonata Software are just some of the many Software services firms that could be facing fresh tax burden after the government clarified tax provisions relating to the use of packaged software. Multiple lawsuits are pending in different courts in India, both in high courts as well as the Supreme Court, challenging authorities who have sought to tax income from the sale of software as royalty.
This has been a point of contention raised by foreign software product companies such as Microsoft that sell its software products in India. While some courts have turned down such tax demands, others have accepted them. [source]
Govt expects Rs 40,000 cr from spectrum sale
The Government has set an ambitious target of raking in nearly Rs 40,000 crore from the telecom sector primarily by selling spectrum. This includes sale of 4G-based broadband spectrum and 2G airwaves vacated by the 122 licences cancelled by the Supreme Court. In the Budget 2011-12, the Government had expected to get Rs 30,000 crore but the revised Budget estimates shows that it got only half of it. In 2010, the Government had managed to get over Rs 1 lakh crore from selling 3G and broadband wireless spectrum but since then the industry has slowed down. [source]
Rural connectivity to get a boost with viability gap funding
The proposal to make fixed line network and mobile tower projects eligible for Viability Gap Funding will help in improving telecom connectivity in rural areas. While fixed line operators have been struggling to operate in rural areas, tower companies have stopped rolling out new infrastructure due to weak industry fundamentals. [source]
Budget brings Vodafone into the tax net
If the amendments were to be enacted into law, Vodafone could face a tax bill of at least $2 billion for the near $11.2-billion deal with Hutchison in 2007. The taxman will also laugh all the way to the bank on a spate of deals involving indirect transfer of shares abroad, but deriving values substantially from assets located in India
““We are examining this proposed decision with our lawyers, but we do not believe this retrospective change in tax law should have any impact on the final judgment handed down by the Supreme Court in our tax case. We continue to have faith in the Indian judicial system.”[source]