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Tower And Infrastructure Providers Association (TAIPA) has exhorted the Government to place the Telecom Industry under lower tax rate under the GST regime.
TAIPA cited that non-availability of input tax credit (CENVAT credit) to impact cost of services and billing by IP-1s to TSPs.
The prime body said it supports GST regime as it will help industry bringing in synergies among various departments, taxations and will ultimately enable ease of doing business by creating ‘one nation-one tax’.
The response comes on the heels as recent announcement on
Recently, Government announced the new GST rate levying 18 percent tax levy for telecommunication services will certainly impact the consumer at large. Further, non-availability of Input tax credit (CENVAT credit) (under the plant and Machinery) to tower infrastructure business will lead to huge impact on the cost of services and billing by IP-1 to Telecom Service Providers (TSPs), which will either be passed to consumers or it will further add on to the huge debt of TSPs due to the hypercompetitive market.
On the development, Tilak Raj Dua, Director General, TAIPA said, “The prime objective of the Government to introduce GST was to ensure that there is no cascading of taxes. Higher tax rate and non-availability to input tax credit defeats the whole purpose of Honourable Prime Minister’s vision of “One nation, One Market, One Law. In number of discussions with government, we have stated the impact of such non-inclusion and higher tax rates which will further impact the overall financial health of the telecommunication industry.”
As per government’s report – the mobile sector’s contribution to GDP which is presently 6.5 percent and will increase to 8.2 percent by 2020.
The Indian telecommunication sector to become the World’s second largest telecommunication market with more than 1.1 billion subscribers connected through 4,50,000 towers mounted with over 15 lakh BTSs, emphasized TAIPA.
The sector further requires huge investment for in-building solutions, fibre and small cell deployment etc. in order create a robust telecom infrastructure to keep pace with technological advancements such as 5G, virtual reality, IoT and artificial intelligence, noted TAIPA.
“Needless to mention, mobile towers are the bedrock of visionary initiatives such as Digital India, Smart City and forthcoming advance technologies such as IoT, 5G and virtual reality etc. Hence, higher tax rate of 18 percent and non-availability of input tax credit will lead to more burden on the overall telecom sector ultimately impacting the tower infrastructure roll out and thereby advance technologies too,” added Dua.
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