'Don't levy Swachh Bharat Cess on telecom services'

GSM industry body COAI on Monday asked the government not to levy Swachh Bharat Cess (SBC) on telecommunication services as there are multiple other levies applicable on the industry.

In its Budget recommendations, Cellular Operators Association of India (COAI) said with levy of SBC, effective rate of service tax has further increased to 14.5 per cent and this would increase the overall cost of telecommunication services for customers.

The government had imposed SBC at a rate of 0.5 per cent on provision of all taxable services with effect from November 15.

Further, it was clarified that the credit of SBC cannot be availed and the cess cannot be paid by utilising credit of any other duty or tax.

On direct taxes, COAI said there is some uncertainty on the withholding tax obligation, if any, under section 194J of the Income Tax Act, 1961 on payments made in consideration for spectrum acquired through trading. “Therefore, a clarification may be issued that payments made in connection with the trading/sharing of spectrum are not in the nature of royalty and hence do not attract withholding tax obligations,” it added.