Communication Ministry seeks tax sops, concessions for BSNL

"We will take up these issues with the Finance Ministry soon… We will also solicit their support in the arena of sales tax," he said adding that so far the erstwhile Department of Telecom Services was paying central sales tax at the rate of four per cent.

"We want continuation of similar sales tax benefit for BSNL… overall the tax and dividend exemptions should help corporation save about Rs 1,000 crore annually," he said while pointing out that government had transferred assets worth Rs 63,000 crore to the new entity.

Ghosh said DTS as government entity was not paying corporate taxes and under the present dispensation any commercial entity would have to pay direct taxes while adding that his ministry was seeking exemption from this. Ghosh clarified that earlier the government had decided to give BSNL tax holiday for five years from April 2000 and said that he was asking Finance Ministry to extend the same benefit from October 1 in view of the delay in corporatising DTS.

The secretary said that DTS was not getting any budgetary support and "we are also not asking any such support from the Finance Ministry for BSNL."

He said that revenue and profits for the first half of the current fiscal would be accounted by the budgetary account, but for the period after October 1 these would be separated into BSNL’s own balance sheets.

DTS had accounted for gross profits of over Rs 7,000 crore in the last fiscal, and given the current situation BSNL was likely to improve the gross margin.

Government launched BSNL on October 1 with authorised capital of Rs 10,000 crore while giving Rs 5,000 crore as paid-up equity.

With the present equity and asset base the corporation has a networth of about Rs 58,000 crore after accounting for its various liabilities, he said adding that BSNL had enormous credit worthiness for meeting all its future investment plans.

Ghosh dubbed BSNL as a gold mine’ saying that it had all India internet licence, cellular opportunities and there were immense possibilities for the corporation to enter JVs with either MTNL or VSNL for mutual benefit.

"We will certainly like synergy of operations in the three state-owned undertakings," he added.