Telecom services costlier with GST; companies miffed
NEW DELHI : Telecom services are set to become costlier under the upcoming Goods and Services Tax (GST) regime with the government placing them under the 18% rate.
Finance Minister Arun Jaitey told reporters on Friday after the GST Council meeting in Srinagar that telecom and financial services will be taxed at a standard rate of 18%. Debt ridden telecom players, looking for a bail out package, expressed disappointment with the rate saying telecom services will become expensive for consumers and impact the government project like digital India and digital payments. At present, telecom consumers are charged 15% in form of tax and cess over their phone bills. “Telecom industry hails GST as an iconic reform but we are disappointed with announced rate of 18%,” mobile industry body COAI’s director general Rajan S Mathews said.
SRINAGAR: The process of thrashing out the nitty-gritty of the goods and services tax (GST) has set in motion the idea of a new “horizontal” federal system where states engage with one another closely, according to some state finance ministers.
In a panel discussion hosted by Mint, they felt that the GST Council had emerged as a platform where finance ministers from the 32 states and Union territories could take up issues other than the roll out of the indirect tax on July 1.
Some of the panellists disclosed that the Council has discussed reworking the basket of goods in the consumer price index (CPI), the gauge that the Reserve Bank of India (RBI) tracks to frame its monetary policy, in order for it to reflect the new consumption and cost of living realities. An updated CPI will be useful in making adjustments in the rates of indirect tax, which affect the poor as much as the rich.
“What the Central Statistical Office needs to do is to evolve a new consumption basket to assess real consumption,” said Jammu and Kashmir finance minister Haseeb Drabu.
At a two-day meeting in Srinagar, the 14th of the Council, it approved tax rates on 1,211 goods and also finalised the rates that various services will attract, completing the GST framework.
The idea of discussing issues other than the single indirect tax within the Council received a positive response from other state finance ministers as well.
“We can develop consensus on that and can take on board the issues brought up by states. GST Council will open a new era of trust between states as well as between the Centre and the states. We have never seen such mutual cooperation between the states in any other body,” said Himanta Biswa Sarma, finance minister of Assam.
Sarma added that the Council can be the foundation of new India and the best symbol of a federal polity. “States are now devoting time among themselves to economic issues, a phenomenon which has never happened before,” he added.
Mentioning an area where states could work together, Kerala finance minister Thomas Isaac said that the 3% borrowing limit for them needs to be raised to enable financially healthy states to borrow more for development purposes.
“If a state is meeting its revenue collection target, why should the Union government limit its borrowing, which is to be used for investing in public assets,” he asked.