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Telecom Sector Heavily Taxed, Says COAI

The Indian telecom sector is heavily taxed and nothing has so far come back in the form of infrastructure or any backing for the stressed industry from the government, the Delhi-based group told ETT.

“Now, the sector is heavily taxed with more than 30% of every rupee industry gets, goes back to the government,” Rajan S Mathews, director-general of the Cellular Operators Association of India (COAI) said, and added that the government was not only double taxing, but whatever it takes from the industry, nothing has come back in terms of infrastructure building or any other support.

COAI represents incumbent telecom carriers such as Vodafone Idea, Bharti Airtel and Reliance Jio.

The telecom group has reiterated that the reserve price stands exorbitant for the next airwave sale.

“I don’t think the industry at the current reserve prices is ready for the auction. We have all, three of us have said that we just can’t afford (high base price) this,” Mathews said.

Last year, the sector regulator recommended spectrum in the 3300-3600 Mhz band, used to roll out fifth-generation or 5G services, at a reserve price of Rs 492 crore per unit for a block of 20 Mhz that means a telco would need Rs 9,840 crore for pan-India services.

The service providers are reeling under a cumulative debt of more than Rs 7.5 lakh crore and are facing pressure on revenue, profits and cash flow owing to continuing price competition.

Mathews, however, attributed the industry’s rising debt level to the existing double taxation.

Billionaire Mukesh Ambani-owned Reliance Jio is the only operator making profits. Bharti Airtel, Vodafone Idea and state-run Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited (MTNL) are posting losses.

“We are not asking for a hand down, but are only saying that don’t tax us much,” Mathews added.

The service operators are seeking government to lower licence fee, spectrum usage charge (SUC), goods and services tax (GST).

In addition, industry’s Rs 35,000 crore has been trapped under the GST regime. The service providers have also been demanding a reduction in the GST rate from the existing 18% to 12%. But no call has been taken so far by the Ministry of Finance.

The telco body said that since the operators were not paying upfront for spectrum purchase, licence fee, and spectrum usage charges were imposed which it reiterated should be cut as a way forward to bring the industry back to health.―Gadgets Now

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