Telcos seek Lower Levies, Taxes in upcoming Budget

Mobile phone service providers have sought a reduction in licence fees, removal of goods and services tax on those fees, spectrum acquisition charges and spectrum usage charges, besides a refund of input tax credits along with tax and custom duty exemptions in the upcoming budget.

“In this challenging time, the industry also faces major upcoming expenses on infrastructure upgradation like spectrum auction, 5G introduction, network expansion and fiberisation, which is very critical for providing future communication services,” SP Kochhar, director general of the Cellular Operators Association of India, said in a statement detailing the sector’s budget recommendations.

According to the association, which represents Reliance Jio, Bharti Airtel and Vodafone Idea (Vi), the relaxation of certain levies is critical for a sector that contributes Rs 58,000 crore annually to the government exchequer and has invested Rs 11.24 lakh crore till date.

“The industry recommends that the licence fee is brought down to 1% from 3% at the earliest to cover admin costs by the DoT/government,” Kochhar said, adding that the rate in India is “way above” the world average.

Currently, telcos pay 8% of their adjusted gross revenue to the government, of which 5% goes towards the Universal Service Obligation Fund. COAI proposed that the fund be abolished and called for the effective rate of spectrum usage charges be reduced by 3% for the three telcos.

With a 4G spectrum auction set for March, telcos burdened with debt of over Rs 8.5 lakh crore may not bid aggressively for airwaves.

The association recommended removal of GST on various fees and charges and payment for spectrum acquired in an auction since it is “compounding the operational challenges.” Instead, keeping in line with international practices, the payment of regulatory levies by telecom operators should be exempted from GST.

COAI highlighted the unutilised input tax credits of Rs 35,000 crore and proposed changes in the GST law.

“The industry recommends suitable amendments in the GST law may be made to allow a refund of unutilised ITC. Alternatively, an unutilised amount may be applied to other government liabilities of operators,” said Kochhar.

COAI also sought exemption from payment of service tax for the period of April 2016 to June 2017.

It recommended exemption from customs duty on certain telecom equipment which presently increases the cost of rolling out critical infrastructure and “is disrupting the cost-effectiveness of the telcos and impacting the financials of the sector negatively.”