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Telecom Services To Get Reduced GST Rates?

Telecom players to get more breathing space in the New Year? A lot of changes in favor of the telcos seem to be in the offing starting from the recommendation made by the Telecom Department to the Finance ministry for the reduction of GST for telecom service from the current 18% to 12%. Telecom Minister, Manoj Sinha revealed the information in a letter written to the Lok Sabha and said that it was awaiting action from Finance Ministry.

Telecom Services To Get Reduced GST Rates?

He further noted that TRAI too was in support of decreasing Universal Service Obligation levy and license fee, reducing Spectrum usage charges and easing the spectrum payout terms considering the telcos debt burden. TRAI found the telcos demand for a decreased GST rate quite justifiable and felt that telecom sector should be given core infrastructure status. It felt that this would lessen the financial burden of the telcos and empower them to provide reasonably priced and efficient services to customers.

Sinha further added that an Interministerial Group was assigned the task of reviewing the sector’s financial difficulties. The Group felt that it was wrong to categorize the entire telecom sector as being under financial stress because the financial capability of every company varied. Some recommendations of the Group are:

  • A one-time opportunity to be offered to telcos, to make their spectrum payment in 16 installments instead of existing 10 if they chose to do so
  • Amendment to trading guidelines for spectrum wherein clarification to be issued by telecom department to include only profit or gain from spectrum trade under revenue for calculating Adjusted Gross Revenue (AGR)
  • Relaxing the rate of interest on delayed payment of spectrum usage charges and license fee
  • Harmonizing spectrum in 2300 MHz and other band widths on an urgent basis
  • Fixation of spectrum reserve price to be done in accordance with global best practices

Sinha said that the matter needed Cabinet approval and further added that consultations with government departments, TRAI are in progress for getting the necessary approvals.

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