budget expectations: Ahead of the budget session, telecom operators, among many others, have sent their recommendations to the central government regarding their demands. Telecom operators, including major companies, have asked the government for refund of input tax credit, or ITC, around Rs 35,000 crore as per reports. It has also demanded that the Center should reduce and waive off the GST on license fee and spectrum usage during the upcoming budget. The budget session is scheduled to begin from January 31. Finance Minister Nirmala Sitharaman will present the annual budget 2022 on February 1, which has been announced by the government recently.
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 the unutilized ITC of Rs 35,000 crore of the industry, which cannot be utilized in the near future. The current market dynamics has largely led to accumulation of ITC,” COAI said.
COAI further said, “The credit will further increase with the upcoming significant capital outlay to further enhance the customer experience and achieve the vision of Digital India.”
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.
“The telecom industry needs investments in strong and reliable communication infrastructure to meet the growing demand for connectivity. There is an urgent need to reduce the duty burden on the sector, said SP Kochhar, Director General, COAI.
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 the 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 the objectives of USO for the next few years. Contribution to 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. “Higher customs duty on telecom equipment is hampering the 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.
(with PTI inputs)