According to the union budget for 2009-10, the government expects to collect Rs 483.35 billion from the telecom sector in the current year, with 3G spectrum sales contributing 75 per cent (Rs 350 billion) of the total receipt. Under the budget provisions, the government has allocated Rs 28.2 billion to Indian Telephone Industries for writing off its debts, as well as Rs 24 billion from the Universal Service Obligation (USO) Fund to subsidise unviable mobile, internet and landline operations in rural India. The unutilised amount in the USO Fund, currently estimated to be over Rs 200 billion, is likely to be used for the second phase of the rural mobile project, under which the government will subsidise the construction of 11,000 telecom towers across 240,000 villages.

With regard to taxes, the fringe benefit tax and commodity transaction have been abolished under the budget, while the minimum alternate tax has been raised from 10 per cent to 15 per cent. The government has also extended the 4 per cent countervailing duty exemption on mobile accessories and components by a year.

However, the telecom industry's demand to rationalise the multiple taxes currently imposed on it at the union and state levels has been overlooked by the budget.