Draft Rule 41 of the Draft Income-tax Rules, 2026 provides clarity on the meaning of “actually paid” in relation to expenditure for obtaining the right to use spectrum for telecommunication services under Section 52(7)(a) read with Section 52(1) (Table: Sl. No. 3) of the Act. Where an assessee opts for and is allowed full upfront payment of spectrum fee by the Department of Telecommunications, “actually paid” refers to the actual expenditure paid, irrespective of the tax year in which the liability was incurred according to the accounting method employed. In cases where deferred payment is opted for and permitted, “actually paid” shall mean the amount that would have been payable had the assessee chosen the full upfront payment option, again irrespective of the tax year of liability. Further, if in a deferred payment scenario the assessee fails to comply with scheme conditions and the spectrum allotment is terminated, the Assessing Officer is empowered under Section 52(5) to recompute total income for the relevant tax year. In such cases, only the spectrum fee paid up to termination shall be treated as “actually paid,” and the spectrum shall be deemed in force only up to the date of termination for determining the eligible tax years.
Extract of Rule No. 41 of Draft Income-tax Rules, 2026
Rule 41
Expenditure for obtaining right to use spectrum for telecommunication services.
(1) For the purpose of section 52(7)(a) read with section. 52(1)(Table: Sl. No. 3) of the Act, the term “actually paid” shall mean,—
Draft Income-tax Rules, 2026
a. where an assessee has opted and been allowed by the Department of Telecommunications, Government of India to make full upfront payment of spectrum fee, the actual payment of expenditure irrespective of the tax year in which the liability for the expenditure was incurred according to the method of accounting regularly employed by the assessee;
b. where an assessee has opted and been allowed by the Department of Telecommunications, Government of India to make deferred payment, the amount which would have been payable by the assessee had he opted for full upfront payment of spectrum fee irrespective of the tax year in which the liability for the expenditure was incurred according to the method of accounting regularly employed by the assessee.
(2) In case of deferred payment referred to in sub-rule (1)(b), where there is failure by the assessee to comply with any of the conditions specified by the scheme of the Department of Telecommunications, Government of India and the Department of Telecommunications terminates the allotment or assignment of spectrum, the Assessing Officer in exercise of power vested in him under section 52(5) of the Act, shall re-compute the total income of the assessee for the tax year in which the deduction has been claimed and granted to him by deeming that,—
a. the total spectrum fee paid up to the date of termination is the amount “actually paid”;
b. the spectrum was in force up to the date of its termination for the purpose of determining the number of tax years as required by section 52(1)(Table: Sl. No. 3, Col. D) of the Act
