COAI Advocates for Tax Reforms and Duty Exemptions in Telecom Budget 2024-25 Proposal

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COAI Advocates for Tax Reforms and Duty Exemptions in Telecom Budget 2024-25 Proposal
The Cellular Operators Association of India (COAI) has submitted recommendations for the Union Budget 2024-25 to the Ministry of Finance, Government of India, focusing on improving the financial health of the telecom industry. The key requests made by the telecom body for the budget are as follows: In terms of Regulatory Levies, COAI proposes the suspension of the 5 percent Universal Service Obligation Fund (USOF) contribution until the exhaustion of the existing Rs 77,000 Cr USO corpus. Additionally, COAI advocated for a reduction in License Fee from 3 percent to 1 percent to cover only administrative costs.

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Also Read: COAI Highlights 2023 Year-End Perspective for Indian Telecom

Definition of Gross Revenue

COAI also requested to have a clear definition of Gross Revenue (GR) and make it abundantly clear from activities for which no license is required.

Direct Taxes

COAI urges the introduction of a special regime under Section 72 of the Income Tax Act, allowing telecom operators to carry forward and set off business losses for sixteen assessment years, addressing the challenges faced by the industry.

Service Taxes

The industry body requests an exemption from Service Tax on the “assignment of right to use natural resources” and seeks relief from Service Tax on the additional liability of Adjusted Gross Revenue (AGR) following the Supreme Court judgment.

Also Read: India Welcomes 2024, Anticipating Transformation the New Telecom Act Brings

Customs Duty

COAI highlights the impact of a 20 percent customs duty on telecom equipment over the past 5-6 years, hampering the rollout of 5G services. The association calls for exemptions on Customs duty for certain telecom equipment, gradually reducing it to zero, depending on the creation of a manufacturing ecosystem in India.

Cable Repair/Installation Operations in EEZ

With the customs duty exemption for vessels engaged in laying submarine cables set to expire on March 31, 2024, COAI emphasises the need for an extension to prevent increased costs, potentially compromising the quality of service provided to customers, and ensure the smooth deployment of submarine cables.

GST

COAI seeks exemption from GST under the Reverse Charge Mechanism (RCM) on payments made to the Department of Telecommunication (DoT). The industry advocates for relief from GST on License Fees, Spectrum Usage Charges, and Spectrum Acquisition Fee, or alternatively, proposes paying RCM on Government Services using available Input Tax Credit.

Also Read: COAI Proposes Resolution Models in White Paper on Large Traffic Generating Platforms

Industry Optimistic

Lt. Gen. Dr. S.P. Kochhar, Director General of COAI, highlights the positive reforms in the sector saying, “The recent forward-looking reforms signal a positive intent towards a robust and future-ready telecom sector, capable of fueling India’s digital ambitions. But to fully realise this potential, we must address the financial constraints impeding the sector’s expansion. Reducing levy burdens is not just an economic necessity, but a strategic investment in our digital future.”

“By allocating adequate resources for 5G rollout, network expansion and fiberisation in the upcoming budget, the government can unlock this critical sector’s full potential and propel us towards a digitally empowered nation. We strongly urge the government to prioritise telecom infrastructure development in the upcoming budget by addressing these regulatory burdens. Doing so will unlock the full potential of this critical sector, propelling India towards a robust and inclusive digital future,” Kochhar added.

COAI says the industry is optimistic that the recommendations put forth will be taken into consideration by the GST Council, as they are critically needed by the industry for the purposes of ease of doing business and working towards restoring the financial health of this essential sector.

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