Q.No. 1 What are the admissible deductions?
Deductions claimed on account of PSTN related call charges and roaming charges (Pass through charges/Interconnect Usage Charges) actually paid to eligible Telecom Service Providers and Sales Tax & Service Tax (if included in the Gross Revenue) actually paid to Government are admissible.
Q.No. 2 What are the documents required for verification of deductions by the CCA offices?
- Covering letter with check list for submission of documents in prescribed proforma.
- Quarterly Statements of Revenue and Licence Fee (AGR).
- Photocopies of invoices duly signed by the Authorised Signatory
- Payment proof duly signed by the Authorised Signatory
- Certified copy of the ledger in case of Intra-Company settlement along with Annexure-AG.
- Certified copy of the statement of net settlement in Annexure-AO in case of Inter-Company settlement.
- Certified copy of Statement of part payments made in annexure – PP in case of part payments made due to billing disputes.
- Power of attorney by Authorised Signatory declaring that information and documents so provided are authentic and verified by the licensee.
- Power of attorney should be submitted with the concerned CCA offices.
- Complete Bank statements (with running page numbers) showing relevant payments of which 1st & last page (should not be blank) shall be signed by the Bank Authorities.
- At the end of the Financial Year, Audited quarterly statements of Revenue and Licence Fee (AGR)
Q.No. 3 What is the schedule for filing of Documents
|Quarterly documents should be submitted within one month from the date of payment of quarterly Licence Fee of relevant quarter as under: Quarter||Last date of payment of Quarterly Licence Fee alongwith AGR||Last date of Submission of Documents in support of deductions claimed.|
Q.No. 4 Whether any extension is allowed for submission of documents?
Time-line limits for submission of documents should be adhered to. However due to unavoidable reasons it is not possible for Licensee to deposit the documents within prescribed time limit then it shall inform the Jt.CCA (Revenue) concerned in writing mentioning the reason for delay. Jt. CCA concerned may grant two extensions up to 15 days each in addition to time for submission of documents on the merit of the case. 3rd extension up to 15 days in exceptional circumstances may be granted by the CCA concerned. Further, 15 days time limit for making representations against demand cum show cause notices issued by DoT (HQ) (after provisional assessment) may be extended but not more than extra 15 days. So, in total 30 days shall be allowed to licensee to submit his representation against demand cum show cause notices. If licensee has already been given opportunity to represent upto 30 days time limit, after issuance of Demand cum show cause notice then same licensee may not be allowed to represent again.
Q.No. 5 Whether payments made by one division to another division of the same Licensee Company (Intra-Company) are allowed as deductions?
Payments made to one division to another division of the same Licensee Company are allowed as deductions on the basis of submission of copies of vouchers/Debit - Credit notes/Invoices and quarterly extract of General Ledger a certificate in Annexure-'AG' duly signed by the Authorised Signatory of the Licensee Company on quarterly basis and at the end of the year certified by the Statutory Auditors of the Licensee Company.
Q.No. 6 Whether net payments made by one Licensee Company to another Licensee Company (Inter-Company) are allowed as deductions?
National Roaming between Inter-company settlements (different legal entity) is allowed on the basis of submission of copies of invoices duly certified by the Authorised signatory of the Licensee Company. A certificate in Annexure-'AO' (Showing invoice wise details) duly signed by the Authorised Signatory of the Licensee Company should be submitted on quarterly basis and at the end of the year certified by the Statutory Auditors of the Licensee Company. Pass through charges between two legal entities should be routed through the bank only and not through mere ledger adjustment.
Q.No. 7 What are Inter- Company/Group Company and Intra-Company/Group Company transactions?
Inter-Company/Group Company transactions are those which occur between two separate legal entities e.g. transactions occurred between RCOM and RTL or transactions occurred between Vodafone Ltd and Vodafone South Ltd. are example of Inter-Company/Group Company transactions. Pass through charges between two legal entities may be routed through the bank only and not through mere ledger adjustment.
Whereas, Intra-Company/Group Company transactions are those which occur within same legal entity e.g. transactions occurred between RCOM, Delhi and RCOM UP (East) or transactions occurred between Vodafone South Ltd, AP and Vodafone South Ltd., Karnataka are example of intra-Company/Group Company transactions.
PS: Names of Companies used are for reference/illustration only.
Q.No. 8 Whether in case of consolidated payments – proof of payments other than deductions claimed – required or not?
In few cases companies generate and pay consolidated invoices e.g. for roaming and management consultancy or for PSTN and Port charges etc, such practice should be avoided in transactions by licensees and invoices for claimable deductions should be raised separately and paid separately e.g. for roaming and PSTN charges separate invoices and for management consultancy and Port charges separate invoices.
Q.No. 9 Whether computer generated Bank statement are acceptable as proof of payment or not?
Complete Bank statements (with running page numbers and logo) whether issued by bank or downloaded from the Bank's website showing relevant payments, of which 1st & last page (should not be blank) shall be signed by the Bank Authorities and Authorised signatory of the Licensee Company duly certifying that the statement contains pages from…….to……. Licensee should show the relevant pages on which transaction is mentioned by mapping of relevant transactions in prescribed format – AO and AG.
Q.No. 10 Whether deductions on account of leased line, port charges and infrastructure charges paid to other eligible Telecom Service Provider are admissible for deduction or not?
Payments made on account of leased line, port charges and infrastructure charges paid to other eligible Telecom Service Provider are not in the nature of pass through charges as per clause 19.2 of UAS and similar provisions of other Telecom Licences, therefore charges paid on these payments.
Q.No. 11 Whether there is any restriction of admissible pass-through amount to the extent of amount shown in the Audited AGR statement?
Deductions can be claimed only if they can be substantiated by proof of actual payment (As per clause 19.2 of UAS license agreement). Deductions allowed should not be more than the deductions claimed as per Audited Quarterly/Annual AGRs. In case the Licensee claims deductions on accrual basis it will be disallowed.
Q.No. 12 Whether amounts paid in previous quarter and claimed in subsequent quarters or claimed in previous quarter and paid in subsequent quarters is admissible or not?
Normally licensee should claim the deduction only in the quarter in which payment has actually been made. Assessment of License Fee is carried out on annual basis, whereas, deduction verification is done on quarterly basis. Verification of deductions on quarterly basis is to facilitate the timely verification of deductions claimed. Accordingly TSPs cannot claim deduction against pass through charges unless and until such payments have actually been made. However, payments made in previous/subsequent quarters may be allowed in subsequent/previous quarters in the same financial year, if found justified.
Q.No. 13 Whether payments made to Government on account of TDS deducted on payments made to other TSP are allowed as deduction or not and which documents are required?
In case where it is mandatory for deducting Tax at source, then payment shall be allowed as and when whole amount of invoice including TDS is paid and claimed, subject to production of proof of payment. Mandatorily TDS is required to be deposited by 7th of the month following the quarter end. Further (a) copy of consolidated challans alongwith copy of complete Forms 26Q, (b) Circle-wise break up of challans & Form 26Q, (c) further break up of concerned circle's amount deposited through challans and (d) a certificate from Statutory/Tax Auditor certifying quarter-wise consolidated amount of Challans and amount paid to Government be submitted.
Mapping of returns with individual transaction cannot be dispensed with although operator can alternately map the breakup of concerned circle amount provided in details at point 'b' above. Soft copy of Forms 26Q shall also be provided in MS excel (2007 format).
Q.No. 14 Whether deductions are admissible If TDS deducted in terms of Tax Laws and deposited on due date falling in subsequent quarter?
When TDS is deposited in previous quarter and claimed in subsequent quarter, in such cases, it will be allowed in the quarter in which full amount of invoice is claimed subject to producing linkage between the invoice claimed and TDS reflected in Form 26Q.No. Above provisions are for exceptional circumstances only and Licensees should avoid making it regular practice.
When deduction against an invoice is claimed in earlier quarter and TDS is deposited in the next quarter, in such cases deduction will be allowed in the quarter in which deduction against invoice is claimed, subject to adherence of date of deposit as per Income Tax Act/Rules prevailing at the time of deposit, at present it is 7th of the following quarter.
If the TDS deducted is deposited after the due date prescribed above, then the deduction will be allowed in the quarter in which it is deposited. If the TDS deducted in March and deposits by 30th April, then it would be deemed to have been deposited in same financial year. However, if it is deposited subsequent to this date, Licensee should claim deduction in the next financial year.
Q.No. 15 Whether deductions are admissible, if separate TDS proofs not submitted.
Mandatorily TDS is required to be deposited as per Income Tax Act/Rules prevailing at the time of deposit. In case where it is mandatory for deducting Tax at source, then whole payment shall be allowed as and when whole amount of invoice including TDS is paid and claimed, subject to production of proof of payment.
Cases where deduction verification has been finalised/closed may not be reopened by CCAs.
Q.No. 16 Whether deductions claimed against part payments arising out of billing disputes are allowed or not?
Part payments in normal circumstances shall not be allowed. Operators shall claim the whole amount only with related payment proofs.
However, in exceptional circumstances, if any payment against invoices is being made partly due to disputes then this part payment shall be allowed subject to deposition of related TDS and production of documents in support of disputes. Licensee shall submit a quarterly detail of such invoices in Annexure- PP. The unpaid/disputed part/amount of invoice mentioned in Annexure-PP may be allowed in future subject to approval by the CCA of the concerned Service Area.
Licensee should submit the updated Annexure-PP showing the invoice details against which deductions were claimed in earlier quarter for part payment, alongwith documents for each quarter during the concerned financial year. Annexure PP may be used as tracking device for future purposes for allowing such deduction claims.
Q.No. 17 Whether amounts passed on to foreign operators on International Roaming are allowed or not?
As per UAS (Item No.57 of Annexure – I, Definition of Terms and interpretation of UAS Licence Agreement) Licence Conditions, IUC/Roaming/pass through charges actually paid for carriage of call to other eligible/entitled Telecom Service Providers are allowed as deductions for the purpose of arriving at AGR.
As per Definition of "Service Providers" given in UAS Licence Agreement, "Service Provider" means Telecom Service Provider licensed under Section 4 of the Indian Telegraph Act 1885 for provision of service.
Therefore, deductions on account of IUC/Pass through charges actually paid and claimed by Licensee may allowed, if actually paid to eligible telecom Service providers granted Licence under Section 4 of Indian Telegraph Act 1885, as per the definition given in the Licence Agreement. Foreign Service Providers are not eligible service provider, as they have not been granted Licence under section 4 of Indian Telegraph Act 1885, therefore, deductions on account of pass through charges paid to them should not be allowed.
Cases where deduction verification has been-finalised/closed may not be reopened by CCAs for the time being till further instructions.
Q.No. 18 Whether amounts paid in previous quarter and claimed in subsequent quarters and amounts claimed in a quarter and paid in subsequent quarters are allowed as deductions?
Assessment of License Fee is carried out on annual basis, whereas, deduction verification is done on quarterly basis. Verification of deductions on quarterly basis is to facilitate the timely verification of deductions claimed. TSPs cannot claim deduction against pass through charges unless and until such payment has actually been made. In normal cases licensee shall claim the deduction only in the quarter in which payment have actually been made.
However, deductions claimed against pass through payments made in previous quarters may be allowed in subsequent quarters in the same financial year, if found justified. Similarly deductions claimed against pass through charges for which payments have NOT been made in previous quarter, may be allowed in subsequent quarters, if claimed again in the quarter in which payment has actually been made, in the same financial year, if found justified. Such cases shall be decided by the officer not below the CCA. This provision will be applicable only in exceptional circumstance.
Licensee shall show the transaction by mapping of relevant transactions in bank statement and prescribed format AO/AG.
In cases where payment made in earlier/next quarter, in such cases amount of deduction claimed should not be negative on annual basis i.e. amount of deductions allowed shall not be more than the amount of deductions claimed, in a financial year.
Q.No. 19 Whether there is any restriction of admissible pass-through amount to the extent of amount shown in the Audited AGR statement?
Deductions can be claimed only if it can be substantiated by proof of actual payment (As per clause 19.2 of UAS license agreement). Deductions allowed should not be more than the Deductions claimed as per Auditor's Certificate/Audited AGR. In case the Licensee claims deduction on accrual basis it will be disallowed.
Q.No. 20 What if amounts shown in the auditor's certificate differs from the amount claimed?
Ideally the amount should match but where such cases arise following action may be taken:
- Allow deduction claimed if it is less than Auditor's Certificate.
- Restrict the claim to Auditor's certificate if the claim is in excess of Auditor's certificate.
Q.No. 21 What if a Licensee submits a NIL AGR?
Verification is to be done for the amounts claimed as deduction. If the amounts claimed as deductions and AGR is NIL, then at the end of Financial Year Licensee may be asked to submit the Audited AGRs alongwith Audited Annual Accounts and other documents.
Q.No. 22 Corporate is exchanging single payment with such Operators and debit / credits are being passed on to respective circles. Whether Company level settlement with other operator for all the circles are admissible or not?
As per clause 22.1 of the UAS License agreement "Licensee will draw, keep and furnish independent accounts for the SERVICE and shall fully comply orders, directions or regulations as may be issued from time to time by the LICENSOR or TRAI as the case may be".
To verify deduction claims, service area wise copy of invoice and proof of payment is basic necessity. Accordingly licensees are liable to draw, keep and furnish accounts licensed service area wise. In such cases Licensee shall maintain and provide circle wise details of payments along with invoice, failing which deductions claimed shall be inadmissible.
Q.No. 23 Whether in case of Consolidated payments – proof of payments other than deductions claimed – required or not?
In few cases company generates and pays the consolidated invoices e.g. for roaming and management consultancy or for PSTN and Port charges etc, such practice should be avoided in future transactions by licensees and invoices for claimable deductions should be raised separately and paid separately e.g. for roaming and PSTN charges separate invoices and for management consultancy and Port charges separate invoices.
However, in present practice of raising consolidated invoices raises doubts that whether CCAs should verify all vouchers related with consolidated amount of Invoice or only the invoices related with deduction claimed?
It is hereby made clear that, in such cases of consolidated payments, invoices related with items other than deductions claimed e.g. management consultancy, Port charges may not be verified at this stage as that will be covered under clause 22.5 of license agreement. Invoices related with claimable deductions (e.g. roaming and PSTN Charges etc) and payment proof with breakup of consolidated payments is sufficient to verify the deductions.
Above breakup should be signed by the Authorised signatory stating that "On behalf of Licensee Company, I bear the responsibility for correctness of above details mentioning consolidated payment of Rs………."
Q.No. 24 Whether Statutory Auditor's certificate is required in case of items of revenue against which netting off is done such as Foreign Currency Gains, interests etc.?
In all such cases where netting off is done in books of accounts, Statutory Auditor's certificate is required to be submitted to the Licensor (CCA) certifying the Gross amounts of the items of revenue against which netting off is done.
Q.No. 25 Whether annual charges paid to BSNL for decreasing the call rates are admissible for deductions or not?