Parliamentary panel seeks reduction of levy on telcos
Govt currently imposes a 2529% levy on gross revenue
NEWDELHI: A parliamentary panel wants the government to slash levies on telecom companies to ensure faster expansion of telecom and digital networks, which is essential for the success of the Digital India programme.
The parliamentary standing committee on finance, in a draft titled Transformation towards
a digital economy, says: “Festering issues relating to the debtridden telecom sector (which is relatively in the nascent stage) with a levy imposed in the range of 25-29% of revenue, require to be squarely addressed on urgent basis. All hurdles on this count should be removed forthwith so that telecom/digital network can expand fast while ensuring service quality to the public.”
The panel, headed by former law minister Veerappa Moily, also wants sharing of networks among all telecom companies, including those in the public sector, and “right of way” from state agencies for telecom service providers while building their infrastructure.
Apart from 18% GST, companies in the sector pay 3-5% and 8% of their adjusted gross revenue as spectrum usage charges and licence fees, respectively, to the government. They also pay a universal services obligation fund levy to the government, which is used to improve coverage in rural and remote areas.
The panel’s draft report comes close on the heels of telecom minister Manoj Sinha’s statement in the Lok Sabha last week that the telecom department has suggested to the finance ministry that GST on telecom services be lowered from 18% to 12%.
The recommendation was made during the ongoing budget exercise, and the matter is with the finance ministry’s department of revenue for necessary action, Sinha added.
Experts say that such moves could provide a huge boost to the sector. “There is very good rea- son for the current regime to change. A taxation approach to sector’s revenue is counter-productive as it rewards inefficient use of spectrum by operators. The government must have the political will to fix it. If it can do that it will be a huge boost to the sector. But this also depends on the government’s willingness to accept lower revenues for the exchequer in the short term,” said Mahesh Uppal, director at communications consulting firm ComFirst India.
The Telecom Regulatory Authority of India too has been pitching for a reduction in licence fee, cuts in spectrum usage charges and the universal service obligation levy, as well as a relaxation in spectrum payout terms, given the debt burden that telecom operators bear. It too has pitched for a lower GST rate.
According to estimates by the Indian Banks Association, the total liabilities of the telecom sector stood at ₹7.75 lakh crore as of March 31, of which bank borrowings and liabilities towards spectrum payment to the telecom department stood at ₹5.80 lakh crore.