Telcos will need to refund sops on forex earnings

In a set back to telecom players, the government said on Thursday the operators were not entitled for duty benefits on foreign exchange earnings from services like overseas calls and Internet.

The Directorate General of Foreign Trade said in a directive that telecom operators will have to refund the duty sops availed under the commerce ministry's export promotion scheme for services -- Served From India Scheme.

In a directive to its regional offices, DGFT said the duty credit of 10 per cent under SFIS has been stopped from 2009-10.

". . .telecom sector is not entitled for SFIS benefits on foreign exchange earned from the year 2009-10 onwards," it said.

Thus any benefit availed of by the telecom service providers in areas like overseas calls and internet in the last fiscal would be recovered by the government, the directive said.

Regional Authorities have been asked to review all the previous sanctioned sops under the scheme and to 'recover or adjudicate . . . any excess grant of SFIS benefits'.

However, no interest would be charged on the recovery amount, DGFT said.

Telecom service providers including Reliance Communications, Tata Services, Bharti Airtel and Bharti Hexacom, which earn foreign exchange through services like overseas calls and internet, had claimed the SFIS benefits.