Budget 2022: Telecom operators demand reimbursement of input tax credit of Rs 35,000 crore

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The 2022 budget will be presented on February 1, 2022

New Delhi:

Telecom operators want government to reimburse input tax credit (ITC) of around Rs 35,000 crore, reduce levies and waive GST on license fees and spectrum usage in next budget .

According to pre-budget recommendations from the telecommunications industry body COAI, whose members include Vodafone Idea, Bharti Airtel and Reliance Jio, the telecommunications industry wants the government to suspend the Universal Service Obligation Fund (USOF), which financially supports the deployment of telecommunications services in rural areas. area, to reduce the load on service providers.

“Pay off unused ITCs of Rs 35,000 crore from industry, which cannot be used in the near future. The current market dynamics have led to the build-up of massive ITCs.

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“Credit would increase further with significant capital spending coming to further improve the customer experience and realize the vision of Digital India,” said COAI.

Currently, license fees paid by telecommunications operators represent 8 percent of revenues from telecommunications services, technically referred to as Adjusted Gross Revenues (AGR).

The government has eliminated several revenue items that were part of the AGR as well as spectrum usage charges (SUC) on radio waves that will be purchased in future auctions as part of telecommunications reforms.

“We thank the government for the recent forward-looking structural and procedural reforms, which we believe will not only bring stability and sustainability to the sector, but will also facilitate the digital needs of citizens.

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“The telecommunications industry needs to invest in a robust and reliable communications infrastructure to meet the growing demand for connectivity. There is an urgent need to reduce the burden of levies on the sector, ”said COAI Director General SP Kochhar.

The Cellular Operators Association of India (COAI) has urged the government to reduce license fees from 3% to 1% and reduce the SUC rate from 3% on spectrum acquired in previous auctions.

“The current license fee is 8% of the AGR, which includes a 5% levy for the USO fund. The existing body of the USO fund, which represents more than 59,000 crore rupees, is sufficient to meet the USO’s objectives for the coming years. Contribution to the USO may be suspended until the existing corpus is used, ”said COAI.

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The industry body said about 85 percent of telecommunications equipment in the country is imported and a basic tariff (BCD) of 20 percent is levied on it.

“Higher tariffs on telecommunications equipment disrupt the profitability of telecommunications companies. BCD exemption should be granted on telecommunications equipment.

“Until good quality equipment is available in India at affordable prices, tariffs for 4G / 5G related network products, as well as other related products, should be reduced to zero.” , said COAI.

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