Telcos want spectrum usage charges, licence fee to be treated as tax
NEW DELHI: Cellular Operators Association of India (COAI) plans to lobby the government to treat levies such as spectrum usage charges and licence fee paid to the Department of Telecommunications (DOT) as tax so that operators can claim input credit.
The industry lobby plans to bring in a top consulting firm to work on the details of the proposal and will then take it to the Telecom Regulatory Authority of India (Trai).
“It will be an elegant way of addressing the issue without having to redefine AGR (adjusted gross revenue). We will have to sit and work out the mechanics... legally and otherwise what does it mean when we classify this as a tax, what is the process, how do the mechanics work in a Gst-like environment,” said Rajan Mathews, director general, COAI.
AGR is the basis on which DOT calculates levies payable by operators and has been a bone of contention in the sector.
The matter has been under litigation as operators argue that AGR should comprise only revenue from telecom services but Department of Telecommunications insists that AGR should include all revenue generated by an operator, including that from non-core operations. Telecom operators are liable to pay around 3-5% and 8% of the AGR as spectrum usage charges and licence fees, respectively, to DOT.
“Once you go to this particular methodology (treating the levies as tax), only telecom associated revenue gets taxed. The original intent of the licence fee is that revenue from telecom gets taxed,” Mathews said. The industry lobby also believes that operators will be able to benefit from input tax credit if the proposal is accepted by the government.
“Once it becomes a tax on the operator, he pays it in the first instance, but he can then also then offset for any other thing that other operators (or third parties) have charged him for,” Mathews said.