Telecom operators unhappy with 18 per cent tax

New Delhi: Telecom operators on Friday slammed the GST council’s decision to impose 18 per cent tax on the sector saying it will put further stress on the companies.

“We believe that the rate announced at 18 per cent will further stress the already bleeding sector,” the telecom operators body COAI said. The sector is currently taxed at 15 per cent.

COAI, DG, Rajan S. Mathews said that the companies had submitted to the government that consideration must be given to the present financial condition of the sector and any rate beyond the existing rate of 15 per cent makes the telecom services more expensive for the consumer.

“It will augment the existing burden of the industry further. This is also likely to slowdown the planned rollout of infrastructure across the country and will have an impact on flagship government initiatives like Digital India, Cashless India and others,” said Mr Mathews.

Revenue secretary Hashmukh Adhia insisted that the tax incidence on telecom services will be unchanged at 15 per cent after the input credit is taken on equipment.

But Mr Mathews said: “You have to differentiate between the impact of GST on companies and consumers. Companies may or may not structure their tariff as per provision of refund but customers will have to pay 18 per cent tax every time bill is generated so consumers will be hit under the GST.”

He said that the telecom sector pays around 30 per cent of its earnings in taxes and levies, including spectrum usage charge and licence fees.

“Imposing 18 per cent  tax on telecom is likely to increase the overall tax burden and therefore may have a negative impact on the consumers’ expenses. It needs to be appreciated that telecom is a necessity and an extremely important infrastructure service and resource and thus deserves more sensitive treatment,” said Uday Pimprikar, Tax Partner, EY India.