Telecom Minister Manoj Sinha today said that he is looking at the impacts of Good and Services tax (GST) regime as the council has fixed 18 percent tax rate on telecom services.
He said, "the telecom operators have already been paying 15 percent tax so there is 3 percent difference. We are considering that at our level."
He added, "they (telecom companies) will also meet GST Council members. We are monitoring it seriously at our level."
The sector is also very disappointed with the new tax slap and said the present financial condition of the sector and any rate beyond the existing rate of 15 percent makes the telecom services more expensive for the consumer.
"It will augment the existing burden of the industry further. This is also likely slow down the planned rollout of infrastructure across the country and will have an impact on flagship govt initiatives like Digital India, Cashless India, and others," said Rajan S Mathews, Director General, COAI.
He said it is noteworthy here that the telecom sector pays around 30 percent of its earnings in taxes and levies, including spectrum usage charge and license fees. Due to a number of reasons including hyper-competitiveness, the sector has come to a point that can be seen as just short of needing a bail-out. Total debt for the sector is at around Rs. 4.5 lakh crore while revenues are around half of this. Despite this, tariffs have been going in the opposite direction of inflation.
Similarly, Uday Pimprikar, Tax Partner, EY India said that "Imposing 18 percent tax on telecom is likely to increase the overall tax burden and therefore may have a negative impact on the consumers' expenses. It needs to be appreciated that telecom is a necessity and an extremely important infrastructure service & resource and thus deserves more sensitive treatment."
The GST is all set to be launched on July 1 and will have rates of 5, 12, 18 and 28 percent.