SMS Termination Charge and Transactional SMS Charge-TRAI

Top of FoTRAI prescribes SMS Termination Charge and Transactional SMS Charge

TRAI has released:

(i) ‘The Short Message Services (SMS) Termination Charges Regulations, 2013’ which prescribes cost based SMS Termination Charge as 2 paise per SMS;

(ii) Amendment to the Telecom Commercial Communications Customer Preference Regulations, 2010 which prescribes a transactional SMS charge of 5 paise per transactional SMS . These regulations will be applicable from 1st June 2013.

SMS termination charges are the charges, which are payable by originating Access Provider to the terminating Access Provider for each SMS, terminated by it on the network of Terminating Access Provider.

As per the prevailing IUC regulations, SMS termination charges are under forbearance. The Authority noted that though the policy of forbearance on SMS termination charge has worked satisfactorily in the past when the use of SMS by the subscriber was limited. In the changed circumstances especially due to exponential increase in the number of commercial SMSs, large imbalance in SMS traffic between the networks of interconnecting service providers, unilateral imposition of SMS termination charge and in case of non agreement, disconnection by some dominant service providers and growing litigations amongst the service providers, the Authority reviewed the policy of forbearance in SMS termination charges and prescribed cost based SMS termination charge.

The issue of IUC for SMS was raised by TRAI in its consultation paper dated 27.04.2011 wherein stakeholders submitted their comments and counter comments. In continuation to its consultation paper, the Authority vide its letter dated 13.12.2012, again also asked all the service providers regarding the international practices with regard to SMS termination charge, network element used for providing SMS termination, cost data and costing methodology for estimating SMS termination charge. Many of the service providers have reiterated their stand of Bill and Keep for SMS termination charge as they have submitted in their comments on the consultation paper dated 27.04.2012. In support of their suggestion of Bill and Keep, they have also submitted international practices in this regard. These service providers have submitted that in case, TRAI decides to prescribe SMS termination charge, it should be strictly on the basis of cost and according to their submission it should be less than 1 paise. On the other hand, some of the large Telecom Service Providers (TSP) are of the view that the termination charge for all types of SMS should be prescribed at a level, which allows the terminating operator to recover their cost as well as successfully address the concerns of SPAM and pesky SMSs. According to these large TSPs, the smaller operators are selling bulk SMSs to the telemarketers at comparatively cheap price and the revenue earned by them through the sale of bulk SMS is primarily because they are able to send large number of transactional and promotional SMS to the subscribers of other networks.

In order to create certainty in the market, exigencies created by certain dominant players and in order to protect the interests of the consumers, submission of some of the service providers that as per Hon’ble TDSAT order, SMS Termination Charges should be cost based and work done principle, the Authority has prescribed cost based SMS termination charge as Re. 0.02 (Paise 2 only) per SMS.

While doing this exercise, the Authority has observed that apart from promotional SMSs, there is a large traffic imbalance between different networks on account of transactional SMSs also. The Authority had earlier prescribed a promotional SMS charge of Re. 0.05 on promotional SMS sent by registered telemarketer in the seventh amendment to Telecom Commercial Communications Customer Preference Regulations, 2010. Therefore the Authority has also simultaneously released eleventh amendment to the Telecom Commercial Communications Customer Preference Regulations, 2010 to prescribe a transactional SMS charge of Re.0.05 (paise 5 only) per transactional SMS. In the amendment to the regulations, the provision has been made to exempt Government agencies from the transactional SMS charges.



Construction services – 25% taxable

Abatement of 75%.

Service provided with respect to

  • Construction of complex, building, civil structure and part thereof , intended for sale , wholly or partially
  • Except those where entire consideration is received after issuance of completion certificate by the competent authority.
  • This is subject to the condition that input used for providing the taxable services have not been taken under the provision of CENVAT Credit Rules, 2004.
  • Value of land is included in the amount charged from the service recipient

Further, for the purpose of valuation the amount charged shall be the sum total of the amount charged for the service including the fair market value of all the goods and services supplied by the recipient in or in relation to the services , whether or not supplied under the same contract or any other contract , after deducting :

1)    The amount charged for such goods or services supplied to the service provider, if any: and

2)    The value added tax or sales tax, if any, levied thereon.







1   In case of Individuals or Proprietary Concerns and Partnership Firm, service tax is to be paid on a quarterly basis. The due date for payment of service tax is the 5th of the month immediately following the respective quarter (in case of e-payment, by 6th of the month immediately following the respective quarter). For this purpose, quarters are: April to June, July to September, October to December and January to March. However, payment for the last quarter i.e. January to March is required to be made by 31st of March itself.

( Refer Rule 6 (1) of Service Tax Rules, 1994)

2     In case of any other category of service provider other than specified at 6.1 above,  service tax is to be paid on a monthly basis, by the 5th of the following month ( in case of e-payment, by 6th of the month immediately following the respective month). However,  payment for the month of March is required to be made by 31st of March itself.      

( Refer Rule 6 (1) of Service Tax Rules, 1994)

3     Service tax is to be paid to the Central Government in respect of service deemed to be provided as per the rules framed.

( Refer Rule 6 (1) of Service Tax Rules, 1994)

4      The facility of e-payment of service tax has been introduced with effect from 11.05.2005. From 1stApril, 2010 e-payment of service tax has been made mandatory for the assessees who have paid service tax of Rs.10 Lakhs (cash+ cenvat) and above during the last financial year or who have paid service tax of Rs.10 Lakhs (cash + cenvat) and above during the current financial year. The e-payment shall be made only in designated banks by 6th day of the following month.

(Refer Rule 6 (1) & (2) of Service Tax Rules, 1994) {List of Banks, authorized to accept e-payment is given in para 12)

5   The assessee is required to deposit the amount of service tax in the designated banks through GAR-7challan.

(Refer Rule 6 (2) of Service Tax Rules, 1994)

 ( Assessees may contact jurisdictional office for details of the designated banks.)

6     While depositing the service tax, the appropriate ‘account head’ pertaining to the particular service category should be mentioned on the challan. The correct accounting heads have been given in the table showing the ‘List of Services’ in para 1.3.

7      If the assessee deposits the amount of tax liable to be paid, by cheque, then the date of presentation of the cheque to the designated bank would be treated as the date of payment of service tax.

(Refer Rule 6 (2A) of Service Tax Rules, 1994)

8       Where an assessee has issued an invoice, or received any payment, against a service to be provided which is not so provided by him either wholly or partially for any reason, or where the amount of invoice is renegotiated due to deficient provision of service, or any terms contained in a contract the assessee may take credit of such excess service tax paid by him, if the assessee:-

          a) has refunded the payment or part thereof, so received for the service provided to the person from whom it was received or

          b) has issued a credit note for the value of the service not so provided to the person to whom such an invoice has been issued

( Refer Rule 6 (3) of Service Tax Rules, 1994)

9     The assessee can opt for provisional payment of service tax in case he is not able to correctly estimate the tax liability. In such a situation he may request in writing to the jurisdictional Assistant / Deputy Commissioner for the same.

( Refer Rule 6 (4) of Service Tax Rules, 1994).

10    Service tax ( including interest, penalty, refund) is to be rounded off to the nearest rupee. 50 paise or more should be rounded off to the next rupee and less than 50 paise should be ignored.

( Refer Board’s Circular No.53/1/2003 dated 11.03.2003)

11    Any person who has collected any sum on account of service tax, is under obligation to pay the same to the Government. He cannot retain the sum so collected with him by contending that service taxis not payable.

( Refer section 73A of the Finance Act, 1994.)

12. Any person providing taxable service to any person shall pay service tax at the rate specified in Sec.66 in such a manner and within such period as may be prescribed.

(Sec.68 of the Finance Act, 1994)

The table below shows the rate of service tax applicable at the relevant period of time.

Sr.No. Period Rate ofService Tax Rate of Education Cess Rate of  Secondary & Higher Education Cess
1. Till 13.05.2003 5% Nil Nil
2. 14.05.2003 to 09.09.2004 8% Nil Nil
3. 10.09.2004 to 17.04.2006 10% 2% of the S.T. Nil
4. 18.04.2006 to 31.05.2007 12% 2% of the S.T. Nil
5. 01.06.2007 to 23.02.2009 12% 2% of S.T. 1% of S.T.
6. From 24.02.2009 10% 2% of S.T. 1% of S.T.




1. Are you a subscriber?

And do you wish to block commercial communications?

You can register your preference with your Service Provider either by way of voice call or SMS.

In either case, you can do so by accessing the number 1909. Please note that this number is Toll Free, which means that the call you make or the SMS you send to this  number will not be charged.

2. In blocking the commercial communication, you have two choices. You can register either in the

(a) Fully Blocked category; or in the

(b) Partially Blocked category

3. If you do not to want to get any commercial communication on your phone either by way of voice or SMS, please register in the Fully Blocked  category;

4. Please register in the Partially Blocked category, if you wish to get commercial communications in the form of SMS in respect of any or all or some of the following seven subjects:

1. Banking/Insurance/Financial products/Credit cards,

2. Real Estate,

3. Education,

4. Health,

5. Consumer goods and automobiles,

6. Communication/Broadcasting/Entertainment/IT,

7. Tourism and Leisure.

Please note that in the Partially Blocked category, you will not receive any commercial communications in the form of voice calls.2

5. How to register?

6. Once you have registered, you should get, subject to the correctness of your request, a unique registration number by SMS within 24 hours of registration. Please keep this number carefully as this will serve as a reference for your registration of preference.

7. Your request for registration on the National Customer Preference Register will be given effect to in 7 days counted from the date of request for such registration to the access provider.

8. If you are already registered in the National Do Not Call Registry (NDNC)  you do not have to re-register; your registration will continue  under the ‘Fully Blocked’ category.

9. You may make a change in your preference at any point of time after expiry of three months from the date of registration or three months from  the date of last change request.  The service provider will confirm the registration of such a request within 24 hours to you through SMS,  subject to the correctness of request.  In case of errors in request, access provider will advise you to make a fresh request.

10. You may make a request for withdrawal of your registration from National Customer Preference Register, at any time after expiry of three months from the date of registration. The service provider will delete your number from the Provider Customer Preference Register inform you of  the withdrawal of your registration through SMS within 24 hours,  subject to correctness of such request. 

11. No amount shall be charged from you for registration or change of preference or de-registration.

12. In case you receive an unsolicited commercial communication after expiry of seven days from the date of your registration in the Provider  Customer Preference Register, you may make a complaint to your Access  Provider, through voice call or SMS. The complaint has to be registered from the telephone number on which the unsolicited commercial communication has been received. Your complaint should be made within three days of receipt of the unsolicited  commercial  communication. 

13. In such complaints, please mention the particulars of the telemarketer, the telephone number from which the unsolicited commercial communication has originated, the date, time in 24 hrs format and brief description of such unsolicited commercial communication.

14. The customer complaint registration facility is toll free and telephone number for the same is 1909. The complaint will be acknowledged with a  unique complaint number provided by access provider immediately.

15. The access provider shall take appropriate action on the complaint and  inform you about its resolution within seven days, subject to the  correctness of the complaint. 

16. Detailed procedure to register the preference in National Customer Preference Register, change in registered preference, de-registration and  registration of complaint is given on website,  tab  ‘Information to customers’.