The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has given its approval for a proposal of the Department of Telecommunications to provide financial support to Mahanagar Telephone Nigam Limited (MTNL) due to its liability arising from levy of Minimum Alternate Tax (MAT).

On account of recent decisions of the Government which includes payment of pension to erstwhile government employees absorbed in MTNL and who opted for combined service pension and financial support on surrender of Broadband Wireless Access (BWA) spectrum. MTNL has earned a book profit of ₹ 2348.49 crore for the FY 2013-14, resulting in a minimum alternate tax liability of ₹ 492.26 crore. The objective of this approval is to provide one time financial support to MTNL due to reimbursement of MAT during the financial year 2014-15 through requisite budgetary provisions.

This decision will help MTNL keep floating in the highly competitive telecom sector. It will also help MTNL arrange finances to meet its basic financial commitments like operations and maintenance of their telecom network.

Minimum Alternate Tax liability prompts government-approved one-time financial support to MTNL to reimburse tax and sustain operations. Approval provides one-time financial support to Mahanagar Telephone Nigam Limited to reimburse its liability arising from the levy of Minimum Alternate Tax, created by book profits due to pension payments to absorbed government employees and adjustments from surrender of Broadband Wireless Access spectrum, funded through requisite budgetary provisions to enable MTNL to meet operations and maintenance commitments.