According to news reports, the government is looking at a proposal from the Telecom Regulatory Authority of India (TRAI) to lower the service tax rate on telephones. At present, a 10 per cent service tax is charged on phones. The regulator has, however, not backed the industry’s demand to withdraw various charges such as licence fee and spectrum charges, and instead merge them into a single service tax. The overall tax burden on mobile service providers is between 17 per cent and 24 per cent. The finance ministry has already indicated that the taxation structure in the telecom sector would be simplified in the coming budget.
