GST Levy Will Lead to Lesser Talk-Time on Fixed Denomination Packs for Prepaid Users: ICRA

By June 1st, 2017 AT 7:37 PM

An increase of in tax rate from 15% to 18% after the introduction of the Goods and Services Tax (GST) will result in costlier telecom services, which will lead to lesser talk-time on fixed denomination packs for prepaid users which account for almost 95% of total user base in India, ICRA said on Thursday.

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For telecom industry, compliance and data management requirement will increase significantly because industry’s operations are divided across 22 telecom circles where in some circles coverall several states. ICRA said that reconciliation of roaming revenues would also be a challenge.

For telecom tower industry the tax incidence will increase to 18% from 15% (service tax). However the same would be passed on to the telecom services sector, ICRA said.

ICRA said that in totality, the impact of GST on the telecom industry will be marginally negative.

The Indian government recently had asked telecom service providers to rejig cost and lower prices to pass on the benefits of tax rate reduction under the Goods and Services Tax (GST) to customers in the country from July this year. “After GST regime, telecom companies would be required to re-work their costing and credits availability and re-jig their prices and ensure that the increased availability of credit is passed on to the customers by lowering their costs,” the Finance Minister said in a statement.

Indian telecom operators recently expressed disappointment over the introducing of the GST rate of 18% on telecom services and said that this would further stress the already bleeding sector. They said that the move would slow down the planned roll-out of telecom infrastructure across the country, thereby impacting initiatives like Digital India, Cashless India.

The current duty differential between imported and domestic handsets made local manufacturing cheaper. However the levy of GST of 12% on both the categories would equate the tax structure by making locally manufactured mobile handsets costlier than before, ICRA said, adding that it may impact the various local manufacturing units which have expanded significantly in last few years.

The Ministry of Electronics and Information Technology has assured the industry of providing the duty differential in some way; however, till the time, any such benefit is announced the local manufacturing of handsets is expected to be under pressure. For imported mobile handsets, the pre-GST tax rate was 18%-27% which will now be 12%.

Passionately following the Indian #Telecom Industry for over a decade from Business, Consumer and a Technical perspective. My primary focus area is Consumer & Digital Experience.

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Kirti KhuranaArenaKaushikSunny | LucknowVijendra Recent comment authors
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Kaushik
Kaushik

GST gonna be disaster .. mark my words !

Arena
Arena

Marked, Lol….you concern is more for Hotels prices right than GST on others. Does this bring loss to your hotel business.? To bring up better selling prices, welfare for farmers.,that to be done from group level Vegetables, essential commodities are non taxed and market demanding. So on basic hotel it adds 7-10 percent tax to old varying 2-5 depending on location.. Each consumer give tips of at least 5 rupees for 100. So for consumer it don’t matter. Onion price raise to 100 per kg, make Hotels raise even idly,thali price, when prices back to normal, idly,thali price remain as… Read more »

Kirti Khurana
Kirti Khurana

they say that some of things will be getting cheaper but i didn’t see anything getting cheaper in my life, there is no coming back for anything.
Yes many things are going to be more pricy for sure. like small cars 28% gst + 5-12% cress this is going to apply on many things than WHAT IS THE POINT OF INTRODUCING ONE TAX ONE if you’re here to only milk common man.

Vijendra
Vijendra

Tax is decreased from 22% to 18%. Operators are crying for wrong reasons.

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