DoT for abolishing service tax on internet

Aiming to boost the broadband penetration, the Department of Telecom (DoT) has suggested the Finance Ministry to abolish service tax on pure internet services in the coming budget.

In its recommendation for the 2013-14 budget, the DoT said the high cost of internet, together with the 12 per cent service tax is a major hindrance to growth of broadband service in the country.

The DoT has a plan to increase the broadband users to 175 million by 2015 from the present 15 million. “If the service tax is abolished, it will help to increase the penetration,” an official in the DoT told Deccan Herald.

Further, the DoT said all its services should be given concessions on the lines of those granted to infrastructure sectors.

“All telecom services should get benefits under Section 80 IA of the Income Tax Act – a 100 per cent tax holiday for l0 years in a block of 20 years – as applicable to other infrastructure sectors,” DoT said in its suggestion.

Currently, only telecom service providers get 100 per cent tax holiday for five years and a 30 per cent rebate in the subsequent five years in a block of 15 years. However, telecom infrastructure companies providing towers, ducts and dark fibre are not getting this benefit.

To encourage domestic telecom equipments makers, DoT has suggested a 10-year tax holiday on a block of 15 years on all profits and gains from the manufacturing industry, including the mobile phone makers.

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