Tower companies term GST rules for cell towers 'regressive'

New Delhi: Mobile tower companies have termed the government's move to not allow tax adjustments on bills they raise to telecom operators as "a retrograde and regressive step", saying it will adversely impact telecom infrastructure rollout in the country.

Mobile tower companies, in their 15th submission to the government on GST, said the move will either lead to increase in cost of mobile services to end consumers or deepen stress of the sector.

"It is a retrograde and regressive step taken by the government as it will impact the overall telecom infrastructure rollout across the nation. Further, Indian telecom sector will witness more stressed financial burden due to these developments," Industry body TAIPA, Director General, Tilak Raj Dua said in a statement.

The government has increased tax rate under GST on telecom services from 15 per cent to 18 per cent, which will make phones bills expensive from July 1. "Considering the current financial health of the telecom industry under the debt of 4.5 lakh crore and ongoing hyper competition in the industry, it is imperative that the non- availability of input tax credit (CENVAT credit) and higher tax rate will impact the overall cost of services and billing by IP-1s to TSPs (Telecom Service Providers)," the statement said.

TAIPA said that the telecom infrastructure industry makes a direct contribution of more than Rs 5,000 crore annually in corporate income tax and service tax and invests more than Rs 10,000 crore annually in equipment's like towers, shelters, batteries, air-conditioners, DG sets etc.

"In a nutshell, such non-inclusion will impact the penetration of telecom services to the bottom of pyramid as this will shoot either cost of services or due to the ongoing hyper competition TSPs  may not pass it to customer, which will further stream the financial burden on the industry," the statement said.

It said that from initiatives of Prime Minister Narendra Modi such as Digital India, Smart Cities, E-Governance services and connecting the bottom of pyramid depends over the availability of critical telecom infrastructure. "For (the) government, it is important to realise that telecommunication services now a days are essential services and need to be extended to bottom of pyramid for developing one connected nation. Over and above, it completely trembles investors interest in the country," Dua said.