Proposed service tax on spectrum to increase mobile bills

By March 15th, 2016 AT 9:53 PM

The Cellular Operators Association of India (COAI) said that the Finance Bill 2016 proposal to declare spectrum allocations as services will result in an additional tax burden of Rs. 77,000 crore for the telecom operators. Customer will end up paying higher tariffs for telecom services as this additional tax levied will be passed on to them.

mobile-bill

“The service tax levy on spectrum assignment means that during auctions lined up for June-July, where reserve price is around Rs 5.36 lakh crore, the industry will have to cough up minimum Rs 77,000 crore as service tax. This is a substantial financial burden on the industry which is reeling under debt,” the COAI said in a statement. This will also have an adverse impact on the government’s ‘Digital India’ initiative and financial inclusion plan, it added reports Times of India.

The Finance Bill 2016 has proposed that assignment of spectrum and subsequent transfer thereof to be declared as services under Section 66E of the Finance Act, 1994. It has said that all government services have been made liable to service tax and to be paid by the recipient on a reverse charge basis with effect from April 1, 2016.

Further, the government has proposed that the Cenvat Credit of the tax so imposed on such assignment is proposed to be deferred over the life of the license period which mean that the industry will be burdened by a minimum effective cost of Rs 40,000- 50,000 crore.

“It is worth noting that what is meant to be a ‘zero cost’ in the cenvat credit system for any operator who has adequate output service tax, will convert up to a 71% cost of the tax imposed. The cost on account of deferral of credit would severely impact the health of the telecom industry,” the industry body said.

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krish
krish

Govt is squeezing telecom operators.

Abi
Abi

The Govt is squezing the public by indirectly leaving tax on the operators. The Govt very well knows that the tax burden will be passed on to public.

This is because the Govt cannot effort to directly tax the public fearing back slash.

The ultimate oblivious is the publico the voted this great Govt, who have done nothing but just raising taxes touchups after year.

Service tax – 12% to 14% now with cess included 15%

Spectrum tax

EPF withdrawal tax( withdrawn after public outcry)

And many mote, we still do not know.

Sunny
Sunny

Those who love their country will always be happy to make some sacrifices for it too, while short sighted people will keep whining, wanting to live with below average standard of living. Try manage a country of 1.3 billion people.

Abi
Abi

According to you, only the salary class alarmist to love their country and make sacrifice, right dear?

The businessmen who make use of the most of the resources are ment to enjoy.

Whats an idea sirji…ohh Nationalist.

Sunny
Sunny

1 billion plus mobile subscribers, tax can be well distributed. Indians have mooched off subsidies and doles for a long time, nobody should whine now when we are asked to make some sacrifices to help the country, especially when there is no corrupt govt. at the center and there is assurance that our tax money will be put to good use. Except the money going to JNU type institutes…that’s all down the drain.

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