Union Budget 2015: Indian Telecom Industry’s issues not addressed says COAI

GSM industry body, Cellular Operators Association of India (COAI) has expressed disappointment over the Union Budget proposals for 2015-16, presented by the Finance Minister Arun Jaitley today, stating that they do not address the requirements of the Indian Telecom sector.
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“While a few proposals in the Union Budget may help growth of telecom and broadband, overall, the industry’s concerns and submissions have been left unanswered. With the Government’s thrust on the Digital India initiative, a more supportive budget was expected for the Telecom sector,” said Rajan S. Mathews, Director General, COAI.

The silver lining in the budgetary proposal for the sector was the linking Jan Dhan programme, Aadhaar and Mobile telephony.“This is a positive step as it recognizes and encourages the role of mobile telephony towards facilitating financial inclusion and will enable well targeted cashless transfers. This will help in the uptake of the mobile payment services,” Mathews pointed out.

The focus on initiatives to expedite the Digital India programme is also positive as it will facilitate the much-needed roll out of Optic Fibre, leading to enhanced connectivity across the nation. Reduction of Corporate Tax to 25% from 30% with the removal of exemptions over the next four years will only result in marginal benefits. However, the industry would have appreciated a clear roadmap for the implementation of the reduction in corporate tax. The deferral of the GAAR provision by 2 years, and the abolition of the Direct Tax Code would also benefit the industry.

“But at the same time, the increase in Service Tax from 12.36% to 14% is negative, adversely affecting the consumers and making the services more expensive,” said GSM body.

“The enabling provisions for levy of Swatchh Bharat Cess have been introduced, which shall be treated as service tax. In case Cenvat credit is not allowed, the suggested cess at 2% would increase the effective service tax rate to 16%; which will be a huge cost for the telecom industry,” he added.