Will the 18% GST Rate Increase the Overall Number of Unlimited Plan Subscribers?

The Government of India introduced GST on July 1, 2017. Under GST, goods and services fall under five tax categories: 0%, 5 %, 12 %, 18 %, and 28 %. The Goods and Services Tax (GST) Council has put telecom services under the 18% slab. Before July 1, 2017, telecom services were taxed at 15%. The 3% increase will reflect in the bills of the postpaid users. For the prepaid users, there will be a deduction in the talk time.

India

Let us understand the impact of GST on prepaid and postpaid subscribers with the help of an example.

Assume that the postpaid bill of a subscriber is Rs.100. With an earlier tax rate of 15%, a subscriber had to pay Rs.115. Now with the introduction of GST, the final bill pay will be of Rs.118.

The effective talk time for prepaid customers will reduce now. If a subscriber recharges a number with a Rs 100 prepaid voucher, talk time will be Rs 81.75. Before GST the talk time was Rs.83.96.

Earlier Now
MRP ST PF TT GST PF TT
10 1.30 1 7.70 1.53 1 7.47
20 2.61 2 15.39 3.05 2 14.95
30 3.91 3 23.09 4.58 3 22.42
50 6.52 3 40.48 4.63 3 39.37
100 13.04 3 83.96 15.25 3 81.75

Idea More Than Full Talktime Plans

MRP Earlier Now
300 315 300
500 550 500
550 575 550
1000 1100 1000
2000 2200 2000
3000 3300 3000

*Inputs : Deepesh Arora
It is to be noted that the recharges done through paper vouchers billed to recharge distributors before July 1 will still attract 15% tax only. So subscribers can enjoy 3% more talk time on these recharge paper vouchers after July 1 till the old stocks last. For net savvy subscribers, there is no such leeway on recharging online. Netizens have to shell out 3% more on recharge from July 1 onwards.

With every incumbent coming up with Unlimited plans and Increase in the tax rate, many subscribers will opt for unlimited plans. GST may not have much impact on the subscribers availing unlimited packs. We anticipate there will not be any increase in the price of unlimited plans and no decrease in the FUP quota limit of these unlimited plans.

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5 Comments on "Will the 18% GST Rate Increase the Overall Number of Unlimited Plan Subscribers?"

 

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Arena
July 4, 2017 3:06 pm 3:06 PM
You should understand now 100 gives 81, still return on 100 value is same or more as before 83 if Telecos pass the tax credit advantage and no cascading tax(tax on tax) effect as before. Means call pulse cost lowers than before, which make pre GST days Same with GST. Telecos will play bluff game in the name existing 4+ lac crore debt and 18 as number. GST closed ways to avoid taxes in the name double taxes. With jio and GST, Airtel can never do another Africa now. Now vendors balance sheet must match telecos., Else have to bear… Read more »
Kiran Reddy
July 4, 2017 1:35 pm 1:35 PM

Not only on telecom there is impact on almost every thing. Government should provide us exact details on how GST would be beneficial to us instead of saying it will have long term benefits.
Same long term benefits were advertised during demonetization but still not sure what is the benefit we have got?
We are with Modi but we need to understand how these are going to benefit us.

Sandy
July 5, 2017 7:36 am 7:36 AM

Let us see how much gov has earned the taxes this year, we can compare it with last year and see the difference it makes. Hopefully we will get more tax this time.

Nikhil
July 4, 2017 6:15 pm 6:15 PM

Lol

dheeraj kumar
July 4, 2017 1:03 pm 1:03 PM

Its an era of smart plans bundled with unlimited calling texting and high speed. If incumbent tend to derail this. There will significant fall in their active customer base for sure. As still they are lagging behind to JIO in terms of offerings. Incumbent still don’t offer unlimited free video calls and other free apps as JIO is offering. Video calls are still charged as 3rs/minute which was their first ever launch price in 2010 when 3G was launched.

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