The Telecom Regulatory Authority of India (Trai) has dropped a proposal to impose penalties of up to 1% of turnover on service providers that file incorrect financial reports after objections by operators.
Instead, Trai has opted for a capped, slab-based penalty framework in its final regulations, under which penalties of as much as ₹5 crore can be imposed, depending on whether the violation is major or minor and the company’s turnover.
For operators with an annual turnover of over ₹5,000 crore, the penalty for filing incorrect reports and hiding material facts is capped at ₹1 crore for minor violations and up to ₹5 crore for major violations. For service providers with an annual turnover of up to ₹500 crore, the penalty is capped at ₹25 lakh for minor violations and ₹50 lakh for major ones.
For operators with an annual turnover of over ₹500 crore and up to ₹5,000 crore, the penalty is capped at ₹50 lakh for minor violations and ₹1 crore for major ones.
The amendments of provisions related to financial disincentives under the Telecommunication Tariff Order, 1999, and the Reporting System on Accounting Separation Regulations, 2016, were announced by Trai on Tuesday.
The regulator relies on filings by operators to verify their revenues, compute statutory levies such as licence fees and spectrum usage charges, and intervene to ensure fair competition and protect consumer interest.
The decision on removing penalties as a percentage of turnover comes as a relief for telecom operators, which had sought a complete rollback of the proposal. According to the operators, no other sectoral regulator in India imposes turnover-linked penalties for routine reporting lapses. Instead, regulators employ fixed nominal penalties to encourage compliance, they told Trai.
“In case of false reporting, nature of non-compliance needs to be assessed primarily on a case-to-case basis. This analysis can be based taking into account factors such as intent, materiality, impact on regulation or competition, and the past compliance record of the service provider,” Trai said in a notification on the updated Accounting Separation (Amendment) Regulations (ASR).
Types of violations
According to Trai, unintentional errors such as typographical mistakes, formatting issues and small calculation inconsistencies are usually minor oversights that do not change the intended meaning but may need correction for accuracy. In contrast, deliberate omissions or misstatements of important information can affect decision-making and regulatory processes and should be treated as serious violations.
“This will not only take care of unintentional or deliberate omissions but also the violations done by larger operators that may have a wider regulatory and costing impact as compared to smaller entities,” Trai said.
“Delinking the penalty from a percentage of turnover and bringing in a fixed structure would benefit operators. The earlier proposal would have led to huge compliance burden on operators and would have been difficult to implement,” said Satya N. Gupta, former principal advisor at Trai.
Gupta, however, said there are usually minor chances for operators to have violations in ASR as these are audited financial reports which are submitted.
According to the amended ASR regulations, if a telecom operator fails to submit reports, the penalty proposed is ₹25,000 for each day of delay for the first seven days. If the default continues beyond seven days, the operators would be liable to pay an additional ₹40,000 for each subsequent day of delay subject to a maximum of ₹10 lakh.
For continued violation in consecutive years, the daily penalty proposed is ₹50,000-75,000, capped at ₹25 lakh. The misrepresentation or reporting of false financial information is then subject to a maximum penalty of ₹5 crore.
To be sure, operators also wanted the regulator to do away with the system of submission of financial reports because audited financial statements already carry such information. However, the regulator wanted detailed financial and non-financial information for analysis and decision making.
In October, the telecom regulator proposed the steeper fines under amendments to two regulations – the Draft Telecom Tariff Order (72nd Amendment) and the Reporting System on Accounting Separation (Amendment) Regulations, 2025. The tariff order amendment mandates reporting new tariff plans or changes to existing ones to Trai within seven working days of implementation. The regulator reviews plans and intervenes if a change is anti-competitive, predatory or harmful to consumer interest.
Steeper fines
As per the amended regulations, if service providers don’t report their new plans or prices on time, steeper penalties are proposed — starting at ₹10,000 a day for the first week of delay, and doubling to ₹20,000 a day after that, up to a maximum of ₹500,000.
During the consultation process, telcos had contended that increasing financial penalties for delays in reporting tariff plans and administrative compliances go against the government’s wider goals of promoting ease of doing business, which includes simplifying compliance and decriminalising minor procedural errors.
Trai, in its counter, said a predictable, transparent, and proportionate enforcement framework enhances regulatory certainty and ultimately supports ease of doing business.
“The financial disincentive framework is not intended to be revenue-generating but is designed solely to promote timely compliance and ensure regulatory oversight among service providers,” the regulator said.