Indian telcos want the government to refund Rs 32,000 crore input tax credit in the 2023-24 budget. The Universal Service Obligation Fund (USOF) has also become a pain for the telcos to contribute to. Thus, they have also asked the government to remove that from the license fee (LF). Along with that, the telcos also want the LF to be reduced to 1%. The license fee is currently 8% of the adjusted gross revenues (AGR) of the telcos. This includes a 3% license fee and a 5% contribution to the USOF. A similar demand from the telcos to cut the LF has been put forth to the government multiple times, but it hasn't worked out yet.
According to an ET report, the Cellular Operators Association of India (COAI) said that the recommendations, if considered by the telcos, would increase liquidity, leave room for expansion, and facilitate investments required to complete the Digital India vision and 5G roll-outs. Further, it would also keep the tariff levels in check for the consumers.
The recommendations, which would go to the telecom department soon, would also include the removal of GST (Goods and Services Tax), Spectrum Usage Charge (SUC) and payment of spectrum acquired in auctions. The report added that COAI would also look for clarifications regarding the availability of input-tax credit on critical telecom equipment, such as equipment on mobile towers.
It is worth noting that the Indian government has already helped the telecom sector by announcing several reforms in September 2021. The reforms announced allowed the telcos to defer AGR dues along with interest on it for up to four years. In addition, the government redefined AGR, where this time, the non-core telecom revenues were removed. This would contribute to lowering the AGR, and that would mean lower LF and SUC, as both levies are based on the total amount of AGR.
