In Short:
The telecom industry is seeking tax reforms and timely implementation of RoW rules in the upcoming budget to boost financial strength and expand networks, especially 5G. Input Tax Credit extension for telecom towers is crucial. COAI recommends reducing License Fee and abolishing USO fund. Focus on achieving self-reliance in telecom equipment for data security and economic growth. Delays in clarity and implementation are causing financial burden on the industry.
Telecom Industry Seeks Tax Reforms and Clarity in Union Budget 2024-25
The telecom industry is calling for tax reforms, timely implementation of amended Right of Way (RoW) rules, and clarity on definitions under the new Telecommunications Act, 2023 in the upcoming union budget 2024-25. These measures aim to strengthen the sector financially, support network expansion, especially in 5G, and improve connectivity in rural areas.
Digital Infrastructure Providers Association (DIPA) Demands Extension of Input Tax Credit
T.R. Dua, Director-General of DIPA, representing major telecom tower companies like Summit Digitel, Indus Towers, and others, has urged for the extension of Input Tax Credit for telecom towers under the GST regime. This change is expected to reduce costs for infrastructure providers and benefit consumers.
DIPA also seeks clarity on the eligibility of related infrastructure and accessories for Input Tax Credit, citing current ambiguity as a financial burden for the industry. Moreover, the association emphasizes the importance of implementing industrial electricity tariffs for telecom infrastructure to reduce operational costs.
COAI Recommends Abolishment of Universal Service Obligation Fund
Cellular Operators Association of India (COAI), representing telecom giants like Reliance Jio, Bharti Airtel, and Vodafone Idea, has proposed the abolishment of the universal service obligation fund (USOF) and suspension of the USO contribution of 5% of AGR. COAI also suggests reducing the License Fee from 3% to 1% to ease the financial burden on TSPs.
Additionally, COAI recommends precise definition of GR and exemption of service tax on additional AGR dues among other tax exemptions to relieve telecom companies from financial strain.
Focus on Self-Reliance in Telecom Equipment Segment
Paritosh Prajapati, CEO of fiber-to-the-home (FTTH) gear maker GX Group, highlights the necessity for achieving self-reliance in the telecom equipment segment for strategic and security reasons. Prajapati stresses the importance of fostering indigenous innovation and reducing dependence on imports to ensure data security for India’s economic and strategic interests.
