Regulatory Levies
COAI has held the view that ideally USOF levy ought to be abolished.Nonetheless, if that’s not potential, then the USO contribution of 5% of AGR could also be suspended until the prevailing USO corpus (Rs 77,000 crores) is exhausted. Additional, License Charge ought to be introduced down from 3% to 1% on the earliest to cowl solely administrative prices by the DoT/Authorities.
The current definition of Gross Income (GR) contains income from all telecom actions. The time period telecom exercise is just not outlined however might embrace income from actions believed to be incidental to telecom exercise. Due to this fact, the definition of GR ought to make it abundantly clear that the income from actions for which no licence is required, shouldn’t be part of GR.
Direct Taxes
COAI has requested to introduce a particular regime for the telecom operators underneath Part 72 of the Revenue Tax Act, 1961, whereby the enterprise losses will be carried ahead and set-off until Sixteen (16) evaluation years, from the prevailing 8 years.
Lapse of enterprise losses publish eight years could be detrimental to the already distressed Telecom Business (resulting from varied components such because the Supreme Courtroom’s ruling in AGR matter, discount in tariff margins resulting from low product pricing, requirement to subscribe to extra spectrums involving large capital outlay, and many others.) because the revenue in the course of the restoration part might be topic to tax outflows and different dedicated pay-outs associated to AGR, spectrum, and many others., inflicting undue hardship to the sector.
Service Taxes
COAI has requested that the levy of Service Tax on “project of proper to make use of pure sources” granted by the Central Authorities/ State Authorities and Growth Authorities be exempted. The judgement of the Supreme Courtroom relating to methodology for calculation of AGR payable to the Authorities has created a further legal responsibility on the telecom service suppliers.
Earlier than the introduction of GST, Service Tax was paid on fee of AGR and Credit score of the identical was additionally made out there. Nonetheless, after introduction of GST, extra fee of AGR on account of SC judgement with service tax, will make service tax quantity as a price for telecom corporations as no credit score might be admissible to them. COAI has proposed the federal government to exempt fee of Service Tax on the extra legal responsibility of AGR pursuant to Supreme Courtroom judgement.
Reduction has been requested by the use of exemption from fee of Service Tax for the interval of April 2016 to June 2017, and on varied companies which have been issued in November 2018. Alternatively, the Authorities might prescribe a time-bound easy course of to say a money refund of the Service tax to be paid underneath the RCM (Reverse Cost Mechanism), which might assist the business to some extent.
Customs Responsibility
The federal government has elevated the customs obligation on Telecom tools to twenty% over a interval of 5 to six years. This has put a further monetary burden on telecom corporations and has impacted rollout of 5G companies in India. COAI has requested exemptions on Customs obligation on sure telecom tools, which presently will increase the price of rolling out this crucial infrastructure.
The business physique has requested that the customs obligation ought to be lowered to zero and should be step by step elevated relying on the creation of an ecosystem for manufacturing of telecom gear in India. Until the time good high quality tools is offered in India at reasonably priced costs, Customs Duties for 4G/5G associated community merchandise, together with different associated merchandise, ought to be introduced right down to nil.
Readability on actions associated to cable restore/set up operations carried out in Unique Financial Zone (EEZ)
Telecom corporations closely rely upon submarine cables for the high-speed switch of knowledge across the globe. The present customs obligation exemption granted to vessels engaged in laying submarine cables in India is ready to run out on March 31, 2024. It’s crucial to increase this exemption to forestall a considerable enhance within the prices related to cable laying. Such a rise might adversely have an effect on the long run deployment of submarine cables, doubtlessly compromising the standard of service offered to prospects.
GST paid by telcos
Presently, GST is being paid by the telecom operators underneath a Reverse Cost Mechanism (RCM) on fee made to the Division of Telecommunication (DoT) in the direction of Licence Charges, Spectrum Utilization Prices and Cost of Spectrum acquired in public sale.
Cost of GST in money on a reverse cost foundation and subsequent Enter Tax Credit score (ITC) utilisation has resulted in substantial accumulation of ITC inside telecom corporations, resulting in a major blockage of working capital and thereby, imposing a considerable monetary burden on these corporations.
Telcos are urging for an exemption from GST underneath RCM on funds associated to those fees, which might alleviate the monetary pressure by stopping additional ITC accumulation and releasing blocked working capital.
COAI has requested the federal government for exemption of GST on Licence Charges, Spectrum Utilization Prices and Spectrum Acquisition Charge, for some much-needed aid to the sector. Alternatively, permitting the fee of RCM on Authorities Companies by the utilisation of the Enter Tax Credit score stability out there within the Digital Credit score Ledger has been proposed.
The business is optimistic that the suggestions put forth by COAI might be considered by the GST Council, as they’re critically wanted by the business for the needs of ease of doing enterprise and dealing in the direction of restoring the monetary well being of this important sector.
