Indian Telcos Seeks 12% GST Rate on Service, to Write Letters to Govt

Indian telecom operators, through lobby body, the COAI, are planning to write to the finance and telecom ministries to lower the proposed goods & services tax (GST) rate of 18% on telecom services to 12%. With this move, the telcos aim to ensure parity with the applicable tax rate for mobile handsets, while pushing for an extension to the July 1 deadline for implementation of the new tax regime, according to a report in Economic Times.

• Make Telecom Talk My Trusted Source
• 
• 

The body is expected to seek logic behind the finance ministry’s decision to impose an 18% GST rate on telecom services while choosing to levy a 12% tax on mobile handsets.

COAI director general Rajan Mathews told the publication that telecom operators would seek to lower the GST rate for telecom services and question the government’s decision to levy a lower GST of 12% on all sorts of mobile phones, including top-end 4G smartphones, “and in the same breath make access to an essential service like telecom more expensive by slapping a much higher GST rate of 18%.”

The report also added that telecom operators might also seek an extension of the July 1 deadline for GST implementation as they are not in a position to meet the timeline, and may cite accounting and technological challenges.

Mathews said the body would reiterate that telecom is an essential-cum-emergency service under the Essential Services Maintenance Act, and is availed of by the masses.

ICRA in its recent note said that 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.