Telecom Industry Urges Tax Relief In Budget To Boost Sector Growth

In anticipation of the upcoming budget, the Cellular Operators Association of India (COAI) has called for significant tax reductions to rejuvenate the Indian telecom sector, crucial for advancing national connectivity and economic growth.

COAI emphasized the necessity of reducing the Universal Service Obligation Fund (USOF) levy, highlighting the substantial capital required for 5G deployment.

The industry body noted that the government could alternatively suspend the 5% USO contribution of adjusted gross revenue (AGR) until exhausting the existing USO corpus of approximately Rs 80,000 crore.

Lt Gen Dr S P Kochhar, Director General of COAI, underscored the telecom sector’s pivotal role in providing affordable connectivity and fostering inclusivity.

He stressed that reducing levy burdens and enabling investment opportunities are critical for the country’s strategic growth.

In its recommendations, COAI advocated for lowering the license fee from 3% to 1%, aimed at covering only administrative costs.

The industry body also expressed concerns over the definition of Gross Revenue (GR), urging clarity to exclude revenues from activities not requiring licensing.

Additionally, COAI proposed a special tax regime under Section 72 of the Income Tax Act, 1961, allowing telecom operators to carry forward business losses for 16 assessment years, up from the current eight years.

The association also sought exemption from service tax on additional AGR liabilities arising from recent Supreme Court judgments, particularly highlighting relief from April 2016 to June 2017.

Looking towards manufacturing, COAI recommended a phased reduction of customs duty to zero for telecom gear, contingent upon the development of a robust manufacturing ecosystem in India.

Furthermore, the association urged the government to exempt GST on license fees, spectrum usage charges, and spectrum acquisition fees to alleviate financial burdens on telecom operators.

Also Read: Indian Equity Indices Start Lower Amid Banking Sector Pressure