The government should clarify taxation rules regarding payments made for acquiring spectrum while working to resolve the issue of 3G spectrum allocation, according to financial consultancy firm PwC.
"There is no specific provision in Indian tax laws governing the deductibility of the payments made for acquiring spectrum," a PwC report on the telecom sector said.
With the allocation of spectrum, especially 3G being an issue of concern, rules governing the same in the taxation laws also assume significance.
"Since, substantial amounts are to be involved for acquiring spectrum, determining its deductibility becomes critical," the firm said.
An issue which follows the dearth of tax laws in case of spectrum is whether such payment is in the nature of capital expenditure or revenue expenditure, the firm pointed out.
"If such expenditure is capital in nature, whether it is eligible for depreciation? If such expenditure is revenue in nature, whether the deduction thereof is allowable in the year of payment or over the period for which the spectrum is allotted," PwC said.