Budget 2019: Ravi Shankar Prasad Seeks Relief Package For Telecom

Communications minister Ravi Shankar Prasad has pitched for a series of relief measures, including lower licence fee, in the budget for the beleaguered telecom sector.

He has also sought a cut in GST rate from 18% to 12%, which can help lower the monthly mobile bill of consumers, but it’s a decision which is outside the budget and a call has to be taken in the GST Council, comprising state and Union finance ministers.

The recommendations are being portrayed as the government’s thrust on expanding Digital India through cheaper tariffs, while also paving the way for “affordable” mobile services, including upcoming 5G technology.

Prasad has proposed a 25% cut in the licence fee that companies pay to the government, sources told TOI. This can be done through a 2% reduction in the Universal Services Obligation Fund (USOF) levy, which could bring down the effective licence fee rate from the existing 8% (5% USOF and 3% administrative charges) to 6%.

The telecom department is also seeking an immediate refund of Rs 30,000 crore blocked and delayed GST input credits owed to the mobile operators by the government. The move to reduce licence fee will benefit all operators such as Bharti Airtel and Vodafone-Idea, and could help them free up cash as they battle heavy debt and mounting losses.

“Mobile handsets, which are now a basic necessity, are charged 12% GST, while mobile services are charged at 18%. Mobile has become a necessity and utility for digital delivery of services to 1.2 billion subscribers, including the poorest sections of society. Thus, there is a need to bring down the high incidence of GST on telecom services… The reduction of GST rate would benefit a very large number of telecom subscribers.”

On the issue of license fee levy, Prasad said that a cut in USOF levy (charged for taking telecom services in uncovered and rural areas) can be done as mobile services have already grown by leaps and bounds over the past few years.―GST Station