What are the advantages of investing in telecom sector?

100 percent FDI is permitted in the telecommunications sector. Up to 49 percent of this is permitted.

What are the advantages of investing in telecom sector?
  1. How much FDI is allowed in the telecommunication sector?

In the telecommunications sector, 100 percent FDI is permitted (up to 49 percent of this is permitted by the automatic route and over 49 percent by government route).

  1. What are the benefits of investing in the telecommunication sector?

Some of the main benefits for investors in the telecommunications sector are basic customs duty (BCD) and the withdrawal of special additional duty. Only the countervailing duty of 12.5% must be charged by importers of cell phone components such as chargers, adapters, batteries, and wired handsets. For local producers of mobile speakers and batteries, a 10.5% duty gain exists.

  1. What are the FDI policies of the government for the telecoms sector?

In the telecoms sector, 100 percent FDI is allowed. Via the automatic route, 49 percent is authorized.

  1. List the deductions admissible.

Deductions claimed on account of PSTN related call and roaming fees (Pass-through fees/Interconnect Use Fees) actually charged to qualifying Telecom Service Providers and Sales Tax & Service Tax (if included in the Gross Revenue) actually charged to the Government are admissible.'

  1. What transactions are inter-business / group company and intra-company / group company?

Transactions between the Inter-Company / Group Company are transactions between two different legal entities, e.g. transactions between RCOM and RTL or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          between Vodafone South  Ltd and Vodafone South Ltd. Examples of transactions between the Inter-Company / Group Company. Passing fees between two legal entities can only be routed through the bank and not simply through ledger change. Whereas inter-Company / Group Company transactions are those that take place within the same legal entity, such as transactions between RCOM, Delhi, and RCOM UP (East) or transactions between Vodafone South Ltd, AP, and Vodafone South Ltd., Karnataka is an example of inter-Company / Group Company transactions. Note: The business names used are for reference/illustration purposes only.

  1. What are the documents needed by the CCA offices for verification of deductions?

The documents requested areas follows-1) Cover letter with a checklist for the submission of documents in the proforma prescribed. 2) Sales and license fee quarterly statements (AGR). 3) Invoice photocopies duly signed by the Approved Signatory. 4) Proof of payment, properly signed by the Approved Signatory. 5) Approved copy of the Intra-Company settlement ledger along with Annexure-AG. 6) Certified copy of the declaration of net settlement in the case of an Inter-Company settlement in Annexure-AO. 7) Recorded copy of the Declaration of part payments made in the Appendix, in the event of partial payments made due to billing conflicts. 8) Power of attorney by the Approved Signatory to assert that the licensee's information and documents so supplied are genuine and checked. 9)The power of attorney should be forwarded to the CCA offices concerned. 10) Full bank statements (with running page numbers) showing specific payments signed by the bank authorities on the 1st & last page (not blank). 11) Audited Quarterly Sales and License Fee (AGR) Statements at the end of the financial year.

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