Sinha says telecom ministry will analyse impact of input tax credit

New Delhi: The Communications Ministry will "analyse" the impact of Goods and Services Tax on telecom subscribers, and approach the Finance Ministry in case consumers or players face "genuine problems", Telecom Minister Manoj Sinha said on Monday.

The GST rate for telecom services is 18 per cent. This is higher than 15 per cent that consumers paid on their phone bills in taxes and cess, before July 1. However, under GST, the telecom operators will also get the benefit of input tax credit, bringing the overall effective rates lower for consumers.

"If there are genuine problems then definitely I will consult the finance minister....We will analyse what people were paying earlier, the impact of GST, and whether input credit is being passed on to consumers," Sinha told reporters here.

As of now there are no plans to approach the GST Council or finance ministry in this regard, he added. The minister noted that the impact of input credit will bring taxation levels lower, and hence the effective rate will be closer to 16 per cent.

He conceded that there may be an operational difficulty for players to claim input tax credit since they operate across geographies. "This is an operational issue...let us see how to resolve this," he said.

Sinha said his ministry is keeping a close watch on the sector with regard to GST implications and will take a call "very soon" based on billing patterns. "But players also cannot go against the spirit of GST. GST Council and Government will see to it," he said.

Sinha said the proposal on the second phase of Bharat Net project - which seeks to provide broadband connectivity to 1.5 lakh gram panchayats - has been sent for cabinet approval, and hoped that it will be taken up shortly.

An official familiar with the proposal said overall outlay for the project stands at Rs 42,068 crore. This includes Rs 11,148 crore for first phase, and Rs 18,792 crore for second phase. Additionally, there are expenses for last mile connectivity and operations and maintenance cost, the official added.

The ministry expects to usher in the New Telecom Policy before March 2018, Sinha said. "A lot of things have changed in the last five years...New technologies like 5G, Internet of Things and Artificial Intelligence have come up...So we will have a wide consultation on those aspects (in the new policy)," the minister added.