Waive service tax on AGR: Telcos to govt

Service tax demand can go up to ~20,000 crore

With notices being sent to telecom companies (telcos) on the service tax they have to pay on their adjusted gross revenues (AGR), the Cellular Operators Association of India (COAI) has written to the government, asking for a law doing away with the tax on the dues the firms have to stump up in compliance with a Supreme Court (SC) order. Or else, the COAI said, the telecom industry will suffer incalculable losses.

The tax demands are as high as ~20,000 crore, with an industry source putting it at 15 per cent of the AGR dues.

“It’s a double whammy. First, the SC asked the telcos to pay additional AGR and now the service tax department wants to levy tax on it,” said an industry source.

The department started issuing notices after the SC in October last year ordered all telcos, including Bharti Airtel, Vodafone Idea, and Tata Teleservices, to pay their past dues to the government. While Bharti Airtel was ordered to pay ~43,980 crore, Vodafone Idea’s dues rose to ~55,000 crore, while Tata Teleservices was asked to cough up ~14,000 crore.

All the telcos have sought 20 years to pay their dues and the SC is hearing their plea.

■ Cellular Operators Association of India seeks exemption under Section 11C of Central Excise Act

■ Telecom companies want Parliament’s approval on exemption

■ Even if service tax is paid, refund should be initiated immediately

■ Additional tax will impact the financials of telecom companies