The Telecom Regulatory Authority of India (TRAI) has recommended the FM, Arun Jaitley to lower applicable 18% GST on telecom services to 12%. Right now, the matter is under consideration of the department of revenue under the ministry of finance, as informed by the telecom minister Manoj Sinha.
According to telecom minister, the TRAI had adored the price cut in license fee, universal service obligation levy, relaxation in spectrum payout terms, and cut in spectrum usage charges (SUC), in order to reduce the debt burden. Furthermore, TRAI also favoured the demand of telecom companies to reduce GST rate in lieu of telecom being a core infrastructure sector.
The other recommendation comprises reducing the interest rate on deferred payment of spectrum usage charges, license fee, and link-up of spectrum in 2300 MHz and some other bands. In addition, a thought to fix the reserve price spectrum is under consideration in relation to global best practices. The inter-ministerial group has also recommended amending spectrum trading guidelines and the telecom department has also cleared that gain or profit generated from spectrum trade is a part of the revenue in consideration of calculation of Adjusted Gross Revenue (AGR).
Mobile Manufacturers Seeks Six More Months
Furthermore, mobile handset companies under the protection of Indian Cellular Association, have asked for six more months extension to liquidate mobile devices of the pre-GST era so that they can claim input tax credit. For now, the last date to get input tax credit benefits on mobiles manufactured before July 1 is December 31, 2017.
In this respect, Pankaj Mohindroo, ICA National President wrote to the Finance Minister and said, “Our feedback is that the six-month July-December 2017 period is insufficient to liquidate the old stock at least 20-30% stock is still in pipeline in the vast supply chain under 35 GST jurisdictions.” The reason for the extension is that by that period of time the garner stock will be consumed. He further said that revenue loss will not occur as the products are already paid with duty and getting tax credit benefits for the unlimited duration is allowed in the new indirect tax regime.
The Indian mobile device industry stands at Rs 1.5 lakh crore and transactions stand for 4-5 times of this value, as the same product passes from many hands to reach the end users. Mohindroo said “There is a lot of resentment in the trade on this and we understand that some parties have gone to the High Court and have secured interim relief. Others too may have gone to court to have the judgment extended to them also. Petitions on the same lines are being filed before the High Court in the other GST jurisdictions. Even the Supreme Court may be seized of the matter.”
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The expected amendment in mobile operator companies and telecom companies proposal will be more relieving for common people without hurting this sector.
