Telecom Industry Objects 18 Percent GST, Knocks Finance Ministry

The Telecom Industry will look into the matter of 18 percent GST rates on the duties of mobile phones. If consumers and companies are facing problems with the new taxation rates, Telecom industry can consult with Finance Minister Arun Jaitley.

Manoj Sinha, Minister of Telecom stated that consumers will be entitled to avail 2 percent input tax credit in the new tax regime which will be provided by the telecom operator, which brings down the effective tax rate from 18 percent to 16 percent.

18 percent tax rates on telecom services have been decided by the GST Council, which is higher as compared to the previous regime. Under the previous regime, people paid 15 percent taxes and plus cess. On Monday Sinha said “If there are genuine problems, then definitely I will consult the finance minister… We will analyse what people were paying earlier, the impact of GST and whether input credit is being passed on to consumers.”

As per the telcos, the government has informed to telecom industry to reduce the prices of services by restructuring the cost to get the benefits of ITC in GST. In the views of Finance Minister Arun Jaitley, the additional input tax credits would be “as much as 2% of the turnover of the telecoms industry.”

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Telcos opposed with the government views. Sinha has admitted that it is difficult for the companies to claim the input tax credit as they operate in several states. “This is an operational issue… let us see how to resolve this”, said Sinha. By adding that, His ministry is continuously keeping an eye on the Telecom industry related to the GST compliance and will take an action “very soon”.

Individually, the ministry has planned spending of Rs 42,068 crore for the important project which provides broadband connectivity to 1.5 lakh Gram Panchayats. As per the department official, the project which includes Rs 11,148 crore for the first phase and Rs 18,792 crore for the second phase, operations and maintenance expenses of last time connectivity has been sent for the approval of the Cabinet.