Telecom operators have requested the government to refund input tax credit (ITC), amounting to approximately Rs 350 billion, reduce levies and waive GST on licence fees and spectrum usage in the upcoming Budget. As per the pre-budget recommendations submitted by Cellular Operators Association of India (COAI), the government should suspend universal service obligation fund (USOF), which financially supports rollout of telecom services in the rural area, to reduce burden on the service providers. COAI believes that the credit would further increase with the upcoming significant capital expenditure to further enhance customer experience and achieve the vision of digital India.
Presently, the licence fees paid by the telecom operators is calculated as 8 per cent of revenue earned from telecom services (known as the adjusted gross revenue). Earlier, as a part of structural and procedural reforms, the government had removed several revenue heads that were part of AGR as well as abolished spectrum usage charges (SUC) on radiowaves that will be purchased in the future auctions as part of the telecom reforms.
In addition, the COAI has urged the government to bring down licence fees from 3 per cent to 1 per cent and reduce SUC rate by 3 per cent on spectrum acquired in past auctions.
As per reports, around 85 per cent of telecom equipment in the country is imported and basic customs duty (BCD) of 20 per cent is levied on them. Further, the high customs duty levied on telecom equipment is disrupting cost effectiveness for telecommunication companies. Therefore, COAI stresses on exemption from BCD to be granted on telecom equipment.
