The leading industry body for telecom operators also suggested that the rate of GST under ‘Reverse Charge on Spectrum’ payment, license fees, spectrum usage charges, etc. can be reduced from the existing 18 per cent rate to the lower rate of 5 per cent slab, since it is revenue neutral to the government and would help in reducing input tax credit (ITC) accumulation.
“COAI has been advocating measures that would reduce the sector's financial burden, thereby enabling further expansion and rollout of next-generation connectivity to achieve the goal of a Viksit Bharat,” said Lt. Gen. Dr. S.P. Kochhar, Director General, COAI.
The license fee, which is a combination of the license (3 per cent of AGR) and Digital Bharat Nidhi Contribution (5 per cent of AGR), is a huge financial burden for the licensed telcos, Kochhar added.
“The Digital Bharat Nidhi contribution should be paused for the time till the unused corpus has been completely utilised by the Department of Telecommunications,” he said.
COAI recommended that special benefit may be provided to telecom operators in GST by way of exemption of GST on regulatory payments of LF, SUC and spectrum assigned under auction.
COAI also suggested that usage of existing ITC balance be allowed for discharging GST under RCM (Reverse Charge Mechanism) on LF/SUC, which will not only protect the cash outflow for telcos but also help in utilizing accumulated ITC.
“Since telecom today is no longer just a vertical, but a ‘horizontal value-added enabler’ for all other verticals, a recalibration of spectrum pricing and assignment models too is necessary,” Kochhar said.
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