DoT for reduction in GST on telecom services

DoT for reduction in GST on telecom services

The Telecom Department has suggested to the finance ministry to lower GST for telecom services to 12% against the existing 18%, Telecom Minister Manoj Sinha informed Parliament on Wednesday.

The recommendation was made during the process of the Budget exercise, and the matter is with the Department of Revenue under the Ministry of Finance for necessary action, the minister said in a written reply to Lok Sabha.

"...the DoT (Department of Telecom)...dated 01.12.2017 had recommended to the Department of Revenue during the process of the Budget exercise that a standard rate of GST at 12% for telecom service should be fixed in place of existing 18%," the minister said.

Sinha noted that the Telecom Regulatory Authority of India (Trai) had favoured reduction of licence fee and universal service obligation levy, cut in spectrum usage charges and relaxation in spectrum pay-out terms, in view of the debt burden on telecom companies.

"The issues are under examination," Sinha said.

To a separate question on the debt of telecom firms, Sinha said interministerial group (tasked to review the financial difficulties of the sector) was of the view that while there were pockets of financial stress, the entire sector could not be described as being in financial difficulty.

This is because debt, capital structure and cash flows and hence repayment capability varied from company to company.

The interministerial group report has recommended giving a one-time opportunity to telecom firms to opt for more number of instalments (16 instead of the current 10 ) for payment of spectrum, and the matter needs further approval by the Cabinet, he added.

 

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