Cellular Operators Association of India (COAI) has proposed recommendations for Union Budget 2026-27 for telecom sector. According to director general, COAI, the industry body has been advocating for measures that would reduce the sector’s financial burden, thereby enabling further expansion and rollout of next-generation connectivity to achieve the goal of a Viksit Bharat.

On reduction in regulatory levies, COAI suggested:

  • The license fee (LF), which is a combination of the license [3 per cent of adjusted gross revenue (AGR)] and Digital Bharat Nidhi (DBN) contribution (5 per cent of AGR), is a huge financial burden for the licensed telcos. COAI has requested that the LF be reduced from 3 per cent to 0.5 per cent – 1 per cent just to cover the administrative costs.
  • The DBN contribution should be paused for the time till the unused corpus has been completely utilised by the Department of Telecommunications.

On goods and services tax (GST), with a vast sum of money being accumulated in the ecosystem, COAI has recommended the following to help in reducing the financial burden and help in providing relief to the sector:

  • Special benefit may be provided to telecom operators in goods and services tax (GST) by way of exemption of GST on regulatory payments of LF, spectrum usage charge (SUC) and spectrum assigned under auction.
  • As an alternative to the above, COAI has suggested that the rate of GST under reverse charge on spectrum payment, LF, SUC, etc. can be reduced from the existing 18 per cent rate to the lower rate of 5 per cent slab, since it is revenue neutral to the government and shall help in reducing ITC accumulation.
  • COAI has also suggested that usage of existing ITC balance be allowed for discharging GST under reverse charge mechanism on LF/SUC, which will not only protect the cash outflow for telcos but also help in utilising accumulated input tax credit (ITC).

COAI believes that the fact that since telecom today is no longer just a vertical, but a ‘horizontal value-added enabler’ for all other verticals, a recalibration of spectrum pricing and assignment models too is necessary.