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Telecommunications operators seek reimbursement of Rs 35,000 Crore Input Tax Credit, GST exemption on license fees


Budget 2022: Telecom operators seek refund of Rs 35,000 input tax credit

Budget 2022 to be presented on February 1, 2022

New Delhi:

Telecom operators want the government to refund an input tax credit (ITC) of around Rs 35,000 crore, tax relief and GST exemption on license fees and spectrum usage in the upcoming Budget.

Following a pre-Budget recommendation by 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), financial support for the deployment of telecommunications services in rural areas, to reduce the burden on service providers.

“Refund of industry Rs 35,000 crore of unused ITC, unusable for the foreseeable future. Current market dynamics have resulted in a massive accumulation of ITC.

“Credit will grow further with the upcoming substantial capital investment to further enhance the customer experience and achieve the vision of Digital India,” COAI said.

Currently, license fees paid by telecom operators are calculated at 8% of the revenue earned from telecom services, technically known as adjusted gross revenue (AGR).

The government has eliminated some revenue heads that are part of the AGR as well as abolished spectrum usage charges (SUCs) on radio waves to be purchased at future auctions as part of 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 industry but also facilitate demand. digital needs of the people.

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

The Mobile Network Operators Association of India (COAI) has called on the government to reduce the license fee from 3% to 1% and reduce the SUC rate to 3% on spectrum obtained in past auctions.

“Previous licensing fee of 8% AGR, including 5% tax on USO Fund. Current USO Fund business, more than Rs 59,000 crore, sufficient to meet USO goals for the next few years. Contribution towards direction to USO may be suspended until the existing data warehouse is used,” COAI said.

The industry body says about 85% of telecommunications equipment in the country is imported, and a basic customs duty (BCD) of 20% is levied on them.

“Higher customs duties on telecommunications equipment are disrupting cost efficiency for telecom companies. BCD tax exemption should be granted for telecommunications equipment.

“Until good quality equipment is available in India at an affordable price, customs duties on 4G/5G related network products, along with other related products, will be lowered zero,” said COAI.

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