Telcos may get relief on taxes, input costs

NEWDELHI: The Centre is working on a two-pronged strategy to aid the crisis-ridden telecom industry by rationalising tax and levies for long-term sustenance of the strategic sector that will follow an immediate bailout package to avert the present crisis involving the payment of ~1.47 lakh crore adjusted gross revenue (AGR) dues before March 17, officials aware of the developments said on Sunday.

In order to boost the sector in the long run, the government is considering proposals such as reduction in the Goods and Services Tax (GST) on telecom equipment and services from 18% to 12%, slashing the levy on the Universal Service Obligation (USO) from 5% to 3% and expeditiously refunding input tax credits worth about ~36,000 crore, two officials from separate ministries said on condition of anonymity.

Instant refund of input tax credit is unlikely as this would require the approval of the GST Council, but immediate bailout may include other measures such as a soft loan, possibly from the accumulated USO Fund, which is more than ~50,000 crore, one of the officials said.

Hindustan Times on Friday reported that the government was considering an immediate bailout package to salvage stressed telcos, particularly two private telecom operators, Airtel and Vodafone Idea, including a review of the calculation of the amount owed by them and allowing them to pay part of the AGR revenue in instalments.

The USO Fund is used to create telecom infrastructure and offer telecom services in inaccessible and non-profitable areas. The USO Fund was established from April 1, 2002. The USO levy is decided by the government in consultation with the Telecom Regulatory Authority of India (TRAI) as a percentage of a telco’s revenue share.