Telecommunications companies require GST exemption on license fees; Know more

Budget expectations: Prior to the budget session, telecommunications operators, among many others, sent their recommendations to the central government regarding its demands. The telecom operators, which include leading companies, have asked the government for a refund of input tax credit, or ITC, of ​​around Rs 35,000 crore according to reports. He also demanded that the Center reduce levies and waive GST on license fees and spectrum use in the next budget. The budget session is scheduled to start on January 31. Finance Minister Nirmala Sitharaman will present the 2022 annual budget on February 1, the government announced recently.

According to pre-budget recommendations from telecom industry body COAI, whose members include Vodafone Idea, Bharti Airtel and Reliance Jio, the telecom sector wants the government to suspend the Universal Service Obligation Fund (USOF). ), which financially supports the deployment of telecommunications services in rural areas. domain, in order to reduce the burden on service providers.

“Reimburse the unused ITC of Rs 35,000 crore from the industry, which cannot be used in the near future. Current market dynamics have led to the massive accumulation of ITC,” COAI said.

“The credit would further increase with the upcoming large capital expenditures to further enhance the customer experience and realize the vision of Digital India,” COAI added.

Currently, license fees paid by telecom operators are 8% of revenues from telecom services, technically referred to as Adjusted Gross Revenue (AGR). The government has removed several revenue heads that were part of the AGR as well as spectrum usage fees (SUC) on radio waves that will be purchased in future auctions as part of the telecommunications reforms.

“We thank the government for the recent forward-looking structural and procedural reforms, which we believe will not only bring stability and sustainability to the sector, but also facilitate the digital needs of citizens.

“The telecommunications industry needs to invest in a robust and reliable communications infrastructure to meet the growing demand for connectivity. There is an urgent need to reduce the burden of levies on the sector,” said COAI Director General SP Kochhar.

The Cellular Operators Association of India (COAI) has urged the government to reduce license fees from 3% to 1% and reduce the SUC rate by 3% on spectrum acquired in previous auctions.

“The current licensing fee is 8% of the AGR, which includes a 5% levy for the USO fund. The existing corpus of the USO fund, which exceeds Rs 59,000 crore, is sufficient to meet the USO’s goals for the coming years. Contribution to the USO may be suspended until the existing corpus is used,” COAI said.

The industry body said about 85% of the country’s telecommunications equipment is imported and a basic customs duty (BCD) of 20% is levied on it. “Higher tariffs on telecommunications equipment disrupt the profitability of telecommunications companies. The BCD exemption should be granted on telecommunications equipment.

“Until good quality equipment is available in India at affordable prices, tariffs for 4G/5G related network products, as well as other related products, should be reduced to zero” , said COAI.

(With PTI inputs)

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