Akhil Gupta, Managing Director, Bharti Enterprises | |
| "Indian telecom industry remains one of the highest taxed industries and there is an urgent need for significantly reducing the taxes levied on it. For instance, a mobile customer has to pay roughly 30 per cent of his bill towards taxes / government levies comprising service tax and licence fee. It is the commitment of the industry that any reduction in government levies will be directly passed on to the customer and thus concessions are not being sought for the benefit of the individual companies but for the customer." |
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| Chamber-Speak |
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FICCI
The government should bring the total tax burden to a reasonable level compatible with other countries, which at present is 26 per cent. |
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| Also, the excise duty on all domestic telecom products should be reduced from 16 per cent to 8 per cent. The Customs duty on all capital goods, raw materials or input components, required to manufacture electronic items and telecom equipment, should be reduced to zero per cent and CST for telecom equipment should be abolished. |
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| STATE OF PLAY |
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| Usha Rajeev, Leader Infocom Practice, PricewaterhouseCoopers |
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| The tax department has been holding that interconnection charges payable by operators amounts to charges received for provision of technical services and therefore covered under section 194J of the Act for TDS purposes. The said interconnect charges are levied for allowing the call from one cellular service provider to be carried to another service provider. These services do not actually qualify as technical services. Hence it should be clarified that Section 194J does not apply to them. The provisions of Section 10AA(5) of the Act may lead one to conclude that an SEZ unit transferred to another person other than in a scheme of amalgamation or demerger would lose the tax holiday for the remaining of the 10-year period. Considering that the tax benefit is associated with the SEZ undertaking and not its ownership, other forms of transfer like slump sale may be specifically incorporated in Section 10AA(5) so that there is clarity on this issue. The telecom sector, a significant contributor, is still overtaxed due to multiplicity of taxes and levies on procurement and distribution like licence fee, access deficit charge, service tax, entry tax etc. In order to rationalize the multiple levies and introduce a single levy on telecom revenue, a Special Committee was set up by the FM last year. The Committee has examined the tax issues surrounding the telecom industry and has submitted its report endorsing the industry's demands to the finance ministry. Use of CENVAT credit pertaining to excise duty paid on capital goods continues to remain a difficult task. The requirement of receipt of the capital goods in the premises is not feasible for the service providers as their operations are not restricted to defined premises and the capital goods are required to be positioned outside the premises. The industry has long requested of a suitable circular/notification enabling credits in such situations. The budget should address this. The tower companies and telecom companies considering spin-off of tower operations are grappling with the taxability of the site provisioning activities which entails lease or renting of towers. The nature of the activities could be perceived as comprising services related to either movable property or immovable property. The indirect tax implications of both vary considerably. Clear clarifications in this regard would be of help in addressing the tax consequences. |
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