Budget 2014: Telecom sector wants government to simplify current tax regime

India's telecom sector is recovering from a phase of intense competition and policy uncertainty, which had hurt revenue and profits. The industry has also been hit by what it calls irrational tax levies as overzealous officials slapped high penalties for even minimum of violations.

The industry, subject to a host of taxes such as service tax, licence fees including Universal Service Obligation levy and spectrum charges besides, state- and municipal-level taxes, wants the government to simplify the current tax regime. Its wish list...

- Rationalise multiple levies such as service tax, value-added tax, excise duty and customs duty. - Advance ruling mechanism be extended under Income-Tax Act for creating certainty on tax interpretations and minimising disputes. - Clarification on entry fee, one-time spectrum payments and revenue share to end unnecessary litigation. - Amend credit rules for claiming refund to help new telecom operators who have incurred large amounts of capex. - Continuity of tax holiday for resulting firm post-M&A under section 80IA; allow operators to claim the tax deductions under this section for 25 years. - Extend benefits under section 80IA to telecom infrastructure services providers. - Amend definition of infrastructure under Direct Tax Code to include telecom so that it gets investmentlinked tax incentives. - Record assets at book value in case of tax-neutral demergers. - Consider telecom as ‘specified business’ under section 35AD(5), grant benefits to installation of plant, equipment on new towers besides replacements. - Raise depreciation rate to 65% on batteries used by telecom infrastructure service so that about 95% cost can be depreciated over 3 years. - TDS provisions should not apply on bandwidth charges, as per international norms.

Source: COAI, AUSPI, TAIPA OR Industry