Proposed service tax on spectrum to increase mobile bills

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.


“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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10 Comments on "Proposed service tax on spectrum to increase mobile bills"


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March 16, 2016 12:35 am 12:35 AM

Govt is squeezing telecom operators.

March 16, 2016 11:32 pm 11:32 PM

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.

March 16, 2016 11:56 pm 11:56 PM

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.

March 17, 2016 6:25 am 6:25 AM

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.

March 16, 2016 12:32 am 12:32 AM

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.

March 15, 2016 10:59 pm 10:59 PM

is india one country? it soon will be doubt among all citizens of india. after so many years of independence. even after so much digitalisation, still there is difference between std and local…. still roaming in telecom…
instead of uniting india as one, this government is increasing tax, so that std , roaming will shoot up… some thing is fundamentally wrong with this stupid trai.. its rule is similar to 23rd pulikesi king..

March 16, 2016 12:38 am 12:38 AM

If India can have the lousy and inefficient federal system, why then there can’t be roaming? Every state does what it wants, so why telecom be any different? Our system was designed in a way so that there is never true unity amongst people. TN for example is run like it’s a different country altogether. If India goes East, TN goes West. Totally disconnected like an island.

March 15, 2016 11:55 pm 11:55 PM


Madhan Kumar
March 15, 2016 11:41 pm 11:41 PM

@Kavin:Ha ha+1.I can understand wat u r saying but those who don’t know Tamil or not have the habit of watching Tamil movies will be thinking who is 23rd Pulikesi King???

hari om
March 16, 2016 6:07 pm 6:07 PM

23rd Pulikesi king is not alive now. issue is we have to move forward with times and shed our Colonial age capitalist way of thinking and money grabbing activities, both at government level with high taxation as well as with private players who collect taxes from consumers and not pay it to the government.