NEW DELHI: Telecom companies have urged the government to abolish the universal services obligation fund (USOF) levy, reduce licence fee, and bring in exemptions from Customs duty on import of telecom equipment and goods and services tax (GST).
The Cellular Operators Association of India (COAI), which represents major telecom companies, has made the recommendations to the finance ministry ahead of the interim Budget for 2024-25.
Currently, telecom operators pay about 8% of the adjusted gross revenue (AGR) dues to the government. Of these, 5% go to the Digital Bharat Nidhi (previously known as USOF) and 3% towards licence fee.
COAI said the USOF levy should be abolished. “However, if that is not possible, the USO contribution of 5% of AGR may be suspended till the existing USO corpus (Rs 77,000 crore) is exhausted,” it said.
The association further said the licence fee should be brought down to 1% from 3% at the earliest, so that it covers only administrative costs of the department of telecommunications.
A reduction in levies has been a long-standing demand of telecom operators. However, sources in the government said there are no plans to reduce the levies as the government has already given the sector a reforms package, along with structural and procedural reforms for ease-of-doing business.
“…To fully realise potential, we must address the financial constraints impeding the sector’s expansion. Reducing levy burdens is not just an economic necessity, but a strategic investment in our digital future,” said SP Kochhar, director general of COAI.
The association has also urged the government to make the definition of gross revenue “abundantly clear”. It said revenue from activities for which no licence is required should not be included in gross revenue.
COAI said the 20% Customs duty on import of telecom equipment puts an additional financial burden on the operators, and it should be removed. “Customs duties have to be gradually increased depending on the creation of an ecosystem for manufacturing of telecom gear in India,” it said.
Till the time good quality equipment is available in India at affordable prices, Customs duties for 4G/5G-related network products should be brought down to nil, it said.
Among other key demands, COAI has requested introduction of a special regime for telecom operators under Section 72 of the Income Tax Act, 1961, wherein business losses can be carried forward and set off for 16 assessment years, from the existing eight years.
The association has also requested the government for an exemption from GST on licence fees, spectrum usage charges and spectrum acquisition fee. Telecom operators have also sought an exemption from GST under the reverse charge mechanism on payments related to such charges, which would increase the financial strain by preventing further input tax credit accumulation and releasing blocked working capital.
Source: The Financial Express
The post Run-Up To The Interim Budget: Lower Licence Fee, Customs Duty On Telcos’ Wish List first appeared on Latest India news, analysis and reports on IPA Newspack.
