TAIPA urges for input tax credit of GST paid towards telecom towers

Tower and Infrastructure Providers Association (TAIPA), the apex representative body of Telecom Infrastructure Providers Category – I (IP-1) formed to expedite the rollout of the telecom infrastructure in the country has written to Aprajita Sharma, DDG(BPF), Department of Telecommunications (DoT) for urgent support and intervention regarding the issue of non-availability of input tax credit on telecom towers.

The telecom infrastructure industry provides services to the telecom operators through their shared infrastructure consisting of tower, shelter, and power solutions to enable voice and data services apart from enabling various digital services like e-commerce, e-health, e-education, work from home, remote meetings, etc. To achieve this, the telecom infrastructure industry requires huge Capex investments on a continual basis. Therefore, there is a need to incentivize the sector in order to attract investments. Further, the criticality of the telecom sector has been proven beyond doubt during the recent pandemic.

T.R.Dua, Director-General, Tower and Infrastructure Providers Association(TAIPA), said, “Currently, the telecom infrastructure providers can not avail of the Input Tax credit against GST paid by them on telecom towers, which acts as an impediment to make further investments. Although under the Central Goods and Services Tax Act, 2017 (“CGST Act”), GST credit is available for plant and machinery, but Telecommunication towers have been specifically excluded from the definition of plant and machinery provided in Explanation to Section 17 of the CGST Act. It would be pertinent to note that the draft GST bill had envisaged provision of the input tax credit on telecom towers; however, this provision was removed in the GST Act, 2017.”

The GST regime had been tailor-made to prevent cascading of taxation regime. In that context, the original GST bill in November 2016 had rightly envisaged the availability of Input tax credit on the telecom towers. However, subsequently, the telecom towers were specifically exempted from the definition of plant and machinery under section 17(5)(d) of GST Act, 2017 which deprived infrastructure providers from availing the Input Tax credit against GST paid on telecom towers.

Hence, the industry has been requesting for the inclusion of telecom tower under the definition of Plant and Machinery so that Input Tax Credit can be made available on telecom towers, since last 4-5 years.

At present, due to the non-availability of Input Tax Credit, the industry has to incur a loss of Rs 1.25 Lakh -1.5 Lakh per tower. Thus, during the last 4-5 years, the Industry has already lost Rs 2500 Cr of ITC so far. Going forward, the demand for telecom towers is likely to cross 50,000 towers on account of 5G, etc, which will lead to an additional loss of Rs 625 Cr to the Industry.

Further, this issue had been taken up by TAIPA during the recent meeting with the Secretary, telecom on 6th January 2021, so that it can be taken up with Finance Ministry prior to the finalization of Annual Budget, which will be finalized very soon. With the annual budgetary exercise likely to conclude soon, we request your urgent support in taking up this matter with the Ministry of Finance if not taken up earlier.

The extension of input tax credit to telecom towers would provide a much-needed momentum to “Digital India” Program of Government of India and assist in creation of resilient telecom infrastructure in the country, Dua further added.
CT Bureau