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Telecom infrastructure providers have written to the finance ministry arguing for the release of input tax credit (ITC) and the rationalisation of tax deducted at source (TDS) provisions in the upcoming Budget.
On Tuesday, the Digital Infrastructure Providers Association (DIPA) said the sector needed government support for the availability of ITC on the telecom towers. Release of ITC has been a key ask from the industry over the past few years. Tower companies have accumulated ITC in abundance on account of goods and services tax (GST) paid on imports of equipment, and domestic reverse charge. But even though GST rules permit companies to claim refund for taxes paid on inputs, telecom infrastructure remains excluded.
Telecom towers are not included in the definition of “plant and machinery” in the Central Goods and Services Tax Act, 2017. DIPA had earlier said the denial of ITC was leading to a huge number of litigations.
DIPA also called for an increase in the tax depreciation rate on batteries for industrial or commercial use to 65 per cent, up from the current 15 per cent. The industry estimates this will ensure the recovery of cost within three years of the economic life of batteries.
The industry body also wants a rationalisation of TDS provisions on the purchase of electricity or diesel. “The Budget should outline supportive policies, simplified regulations, and simple GST norms to aid the development of the telecom infrastructure industry,” T R Dua, director-general of DIPA, said.
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“Measures to facilitate ease of doing business would increase investment and contribute to the telecom industry’s long-term growth. We are looking forward to the government of India’s support in this,” Dua added.
The largest players in the industry — including American Towers, Indus Towers, and Summit Digitel — are members of DIPA.
Industry insiders say cost pressures rising out of an untenable tax regime has been a key reason behind the consolidation in the sector. Earlier this month, Canada-based Brookfield Asset Management announced plans to acquire the Indian business of American Tower Corporation for $2 billion. Brookfield’s third acquisition in India’s telecom sector in the past four years is set to make it the largest manager of telecom towers in the country, beating Indus Towers.
Ascend Telecom, CloudExtel, Pratap Technocrats, Crest Digitel, Signotox Towers, Applied Solar Technologies, iBUS Networks and Suyog Telematics are also DIPA members.
In India, there are more than 7.7 lakh telecom towers that host almost 27 lakh base transceiver stations (BTS). A BTS is a fixed radio transceiver in any mobile network.
