COAI has written to the finance ministry seeking waiver of service tax on adjusted gross revenue (AGR) dues to be paid to the government.

The telecom operators have been paying service tax and GST under the reverse charge mechanism (RCM) on licence fees and spectrum usage charges (SUC) paid to the Department of Telecommunication (DoT) for the period starting April 1, 2016.

As per COAI, the industry paid around Rs 66 billion between April 2016 to March 2017 in cash to discharge its output service tax liability.

Earlier in October 2019, the Supreme Court had ruled that revenue from non-telecommunication businesses will be included in the calculation of the annual AGR of telecom companies, a share of which is paid as licence and spectrum fees to the exchequer.

According to COAI, even after considering incremental demand, due to SC’s October 2019 verdict, the total service tax payable under RCM on licence fees and spectrum usage charges would have been less than Rs 20 billion.

That said, had the industry known about the incremental demand of LF and SUC, it would have considered the same for computing the amount to be paid under RCM.

Consequently, the output service tax liability paid in cash at that time would have reduced by a corresponding amount.