Association Of Telecommunication Companies Demand Lower Taxes, Custom Duties Ahead Of Union Budget; Read Details

Telecommunication companies providing mobile phone service have expressed their demands ahead of the upcoming Union Budget, Economic Times reports.

The telcos have asked for reduction in license fees and removal of GST on those charges along with a cut down in spectrum acquisition and usage charges. They have also pursued a refund of input tax credits and exemptions on tax and custom duties.

The Cellular Operators Association of India (COAI) represents leading companies like Bharti Airtel, Reliance Jio and Vodafone Idea (Vi). SP Kocchar, director general of the association, told ET, “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.”

Kocchar further added that the license fees in the country should be slashed to 1% from the current 3% regime as this can help to cover the admin costs by the Department of Telecommunications (DoT) and the government.

The union has also called for the abolishment of the Universal Service Obligation Fund, which amounts for 5% of the total 8% adjusted gross revenue that the telcos pay to the government. Furthermore, the COAI has demanded for the effective rate of spectrum usage charges to be reduced to 3% for the three concerned companies.

Telcos have argued that GST on different fees, charges and in the payment for spectrum obtained in an auction tends to compound the operational challenges for the companies. Hence, they have sought its elimination and drawn parallels from international standards to exclude of payment of regulatory levies from the ambit of the GST.

“The industry recommends suitable amendments in the GST law may be made to allow a refund of unutilised ITC (input tax credit). Alternatively, an unutilised amount may be applied to other government liabilities of operators,” Kocchar added.

Moreover, the association believes that customs duties on certain telecom equipment shoots up the cost required for the rolling out of critical infrastructure. They asserted that this factor hampers the cost-effectiveness of the telcos and negatively influences the financials of the sector. Lastly, the COAI has sought immunity from paying service tax from April 2016-June 2017.