Telecom operators demand refund of input tax of Rs 35,000 crore

Budget 2022 to be presented on 1st February 2022

New Delhi: Telecom operators want the government to roll back input tax credit (ITC) worth around Rs 35,000 crore, reduce levies and waive off license fee and GST on spectrum usage in the upcoming budget.

As per the pre-budget recommendations of the telecom industry body COAI, whose members include Vodafone Idea, Bharti Airtel and Reliance Jio, the telecom sector wants the government to suspend the Universal Service Obligation Fund (USOF), which is a fund for telecom services in rural areas. Financially supports the rollout. sector, to reduce the burden on the service providers.

“Refund of unutilized ITC of Rs 35,000 crore of industry, which cannot be utilized in near future. Current market dynamics has led to accumulation of ITC on a large scale.

“The credit will further increase with the upcoming significant capital outlay to further enhance the customer experience and achieve the vision of Digital India,” COAI said.

Currently, the license fee paid by telecom operators is calculated as 8 per cent of the revenue earned from telecom services, technically called Adjusted Gross Revenue (AGR).

The government has removed several revenue heads that were part of the AGR as well as abolished spectrum usage charges (SUCs) on radio waves that would be bought in future auctions as part of telecom reforms.

“We thank the government for the recent forward-looking structural and procedural reforms, which we believe will not only bring stability and stability to the region but will also facilitate the digital needs of citizens.

COAI Director General SP Kochhar said, “The telecom industry needs to invest in strong and reliable communication infrastructure to meet the growing demand for connectivity. There is an urgent need to reduce the duty burden on this sector.”

The Cellular Operators Association of India (COAI) urged the government to reduce the license fee from 3 per cent to 1 per cent and the SUC rate on spectrum obtained in the previous auction by 3 per cent.

“The prevailing license fee is 8 per cent of AGR, which includes a 5 per cent levy for USO Fund. The existing USO Fund corpus, which is over Rs 59,000 crore, is sufficient to meet USO objectives for the next few years. Contribution to the USO may be suspended till the existing funds are utilised,” COAI said.

The industry body said around 85 per cent of telecom equipment is imported into the country and basic customs duty (BCD) of 20 per cent is levied on them.

“High customs duty on telecom equipment is hampering cost effectiveness for telecom companies. Telecom equipment should be exempted from BCD.

“As long as good quality equipment is available at affordable prices in India, the customs duty for 4G/5G related network products as well as other related products should be brought down to zero,” COAI said.

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