TRAI Scraps 1 Pc Turnover Penalty Plan For False Accounting, Cost Reports; Fixes Fines With Caps For Telcos

 

New Delhi : Telecom regulator TRAI has dropped a proposal to impose disincentives of up to one per cent of turnover for inaccurate accounting separation or cost reporting by telcos, and instead stipulated a graded penalty framework with caps for such violations.

The information provided by accounting separation reports is required for regulatory purposes such as analysing costs, revenues, capital employed in major areas of an operator's business, measuring financial performance, and profitability of various products and services.

 

In its draft form, the regulator had mooted a penalty of up to one per cent of the service provider’s turnover for submission of false or misleading information, a proposal that the industry had decried as being excessively stringent and disproportionate. On Tuesday, TRAI released amendments to provisions of two key regulations - Telecom Tariff Order and Accounting Separation.

 

On accounting separation, TRAI, outlining graded penalties based on slabs of annual turnover, said: "If the report furnished by the service provider under regulation 5 is false or if, in its report, the service provider deliberately omits any material fact knowing it to be material, the service provider shall be liable to pay financial disincentive..."

Accordingly, the telecom regulator has stipulated a penalty of up to Rs 25 lakh for minor violation in case of companies with turnover of up to Rs 500 crore, and up to Rs 50 lakh if the violation is major.

For companies whose turnover ranges between Rs 500 crore and Rs 5,000 crore, the financial disincentive for minor violation is up to Rs 50 lakh and for major violation the amount may go up to Rs 1 crore. For companies with turnover exceeding Rs 5,000 crore, TRAI has stipulated penalty of up to Rs 1 crore and up to Rs 5 crore for minor and major violations, respectively.