Telecom industry disappointed at unchanged GST rate

NEW DELHI: Industry body COAI today said it is disappointed with GST rate for telecom services remaining unchanged at 18 per cent.

The Cellular Operators Association of India - which has Bharti Airtel, Vodafone, Idea Cellular and Reliance Jio as members - has been pushing for lowering of Goods and Services Tax, or GST rate, for telecom services to five per cent in sync with essential services.

The debt-ridden industry has been saying that benefit of input credit is not enough to fully compensate the higher tax incidence in the new regime, and that telecom services are bound to become expensive for consumers once the new rates come into effect.

At present, telecom consumers are charged 15 per cent in form of tax and cess over their phone bills.

"We are disappointed that there has been no change in the GST rate for telecom, which is an essential service. It will increase the cost to consumers," COAI director-general, Rajan S Mathews told PTI.

The GST Council, chaired by Union Finance Minister Arun Jaitley and having state counterparts as members, today lowered tax rates on 66 of the 133 items demanded by various sections of the industry.

Asked if there would be any further revision of rates, Jaitley said the fitment committee and the GST Council have gone into the depth of all the cases and whatever rates have been decided are based on "informed reasons" and "detailed discussions".

"These broadly are the final rates... just because somebody raises an issue does not mean you have to grant it," Jaitley said.

Last week, COAI had shot-off a letter to the Revenue Secretary - the second such letter in a week - lamenting the high GST rate fixed for the telecom sector.

"While telecom is an essential service, it does not receive the benefits of that category....we seek your intervention that the government consider lowering the GST for telecom to be the same as that of essential services that is five per cent," Mathews said in the letter dated June 7.

The apex industry body had highlighted that Singapore has a GST rate of only 7 per cent on telecom services, Malaysia (6 per cent), and Australia (10 per cent).

The COAI letter further added that the sector, which has over a billion consumers and offers one of the lowest voice call rates in the world, is undergoing one of its most disruptive phases. The sector is reeling under a "daunting" debt burden of Rs 4.6 lakh crore.

"...We submit that the government extend urgent rescue and relief to the sector....the move to raise GST rates is contrary to the need of the hour, as it is going to effectively increase the tax burden on the end consumer, break the back of the industry further and inevitably lead to a hike in telecom services prices," it said.