According to the Tower and Infrastructure Providers Association (TAIPA), the telecom infrastructure companies are likely to incur a loss of around Rs 6.25 billion under the current goods and services tax (GST) norms. Further, it added that at present, the telecom infrastructure providers can not avail of the input tax credit (ITC) against GST paid by them on telecom towers, which acts as an impediment to make further investments.
To this end, the tower body has urged the Department of Telecommunications (DoT) and finance ministry for inclusion of towers in the definition of items eligible to avail input tax credit under the GST Act. In a letter to the DoT, TAIPA shared estimates that the industry has to incur a loss of Rs 125,000-Rs 150,000 per tower. “During the past 4-5 years, the industry has already lost Rs 25 billion of ITC so far. Going forward, the demand for telecom towers is likely to cross 50,000 towers on account of 5G, etc, which will lead to an additional loss of Rs 6.25 billion to the industry,” TAIPA said in the letter.
Although under the central GST Act, 2017 (CGST Act), GST credit is available for plant and machinery, but telecommunication towers have been specifically excluded from the definition of plant and machinery provided in explanation to Section 17 of the CGST Act. It would be pertinent to note that the draft GST bill had envisaged provision of the input tax credit on telecom towers; however, this provision was removed in the GST Act, 2017. Hence, the industry has been requesting for the inclusion of telecom tower under the definition of plant and machinery so that ITC can be made available on telecom towers, since the last 4-5 years, it added.
