GST: TRAI bats for lower taxes for telcos; favours cut in GST rate

New Delhi: Telecom Regulatory Authority of India (TRAI) has exhorted the telecom department to “favourably consider” its recommendations to cut levies and relaxing payment period for auctioned spectrum. This, TRAI said, will help ease the financial burden of telcos and keep services affordable.

TRAI has also asked the telecom department to take up with the finance ministry two issues—reduction in GST rate to five per cent from 18, and treating telecom as core infrastructure sector.

The regulator said it finds “considerable merit” in these two suggestions made by telecom operators. “On several other issues like levies of licence fee, universal service obligation (USO) fund, spectrum charges, promotion of wireline infrastructure, etc., the authority in the past has already given its recommendations to the government,” TRAI principal advisor, SK Mishra said in a letter to Aruna Sundararajan, secretary, department of telecom and chairperson of telecom commission.

TRAI had favoured reducing USO levy to three per cent (compared to five per cent of telcos’ revenue) so that effective licence fee is reduced to six per cent (compared to eight per cent). It had also recommended that spectrum usage charges for all auctioned spectrum should be three per cent of telcos’ gross revenue.

TRAI had also, in January 2016, recommended that the balance payment period for instalments of auctioned radiowaves be increased to 18 years. In its latest letter, TRAI has asked the telecom department to favourably consider its past recommendations in this regard as they would help in minimising the financial stress of the telecom companies and enable them to offer quality services to consumers at affordable prices.

On other issues raised by the telecom companies, TRAI is already in the midst of consultation, the letter said, citing ongoing regulatory work on call connect charges (called interconnection usage charges), rules of tariff assessment and spectrum related issues.

The letter comes on the heels of a discussion held by TRAI with industry representatives. It may be recalled that earlier this month, the TRAI had met all telecom operators, as part of efforts to look at measures that can resolve a raging financial crisis in the telecom industry.

The debt for the industry has touched Rs4.6 trillion, and telecom operators, even the large ones are facing severe pressure on revenue and profitability after the entry of aggressive newcomer Reliance Jio.

Referring to the operators’ suggestions of treating telecom sector as core infrastructure sector and reduction in GST, TRAI said it finds “considerable merit in their proposition as this would be in the interest of end consumers of telecom services and would help in realising the goal of digital India”. “DoT may consider actively taking up these issues with the ministry of finance,” the TRAI letter added.

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