Raja seeks extension of special tax sops for IT firms by three yrs

Written by Corporate Bureau | New Delhi | Updated: Jun 12 2009, 04:11am hrs
Communications and IT minister A Raja on Thursday met the Prime Minister seeking his support for the extension of the special tax sops for IT firms by another three years. According to sources, Raja also discussed the issue of conducting the 3G spectrum auction which has been postponed by over a year owing to differences over the reserve price.

Raja is understood to have met the PM in the morning to apprise him on the current scenario in the IT as well as the telecommunications sector including the ongoing issues of roll-out of 3G and wireless broadband (WiMax) services. 3G spectrum is the next generation technology, which enables faster download of data on the mobile phones. Currently only the state-run BSNL and MTNL have been allotted the 3G spectrum and are expected to match the bid price for the spectrum once the auction takes place.

The meeting comes at a time when the government is busy deciding upon the reserve price, which the department of telecommunications set at 2,020 crore after doubling it from the Telecom Regulatory Authority of Indias (Trai) recommended amount, while the finance ministry proposed to double it at Rs 4,040 crore. The matter was initially to be settled by the Cabinet Committee on Economic Affairs (CCEA) but the CCEA then referred it to a group of ministers (GoM). However post the elections it is being sought as to whether it would be taken afresh by the CCEA or would once again referred to a GoM.

The minister mentioned about the number of players to be considered for allotting 3G spectrum in the first round of auction of spectrum and the pricing mechanism.

On assuming office Raja had stated that he would focus on conducting the 3G spectrum and the broadband wireless auction within three months, hoping for the network roll-outs by this calendar year end.

The government was earlier hoping to mop up approximately around Rs 40,000 crore from the 3G spectrum and BWA auction but has had to revise its estimates downwards to less than Rs 30,000 crore owing to the global financial downturn.