Study moots rationalisation of taxes, levies to boost stability of debt-laden telecom sector

KOLKATA: Simplification and rationalisation of multiple taxes and levies such as spectrum usage charge (SUC) will provide financial stability to India’s debt-laden telecom industry which is splurging big money on network rollouts and spectrum purchase, an Assocham-KPMG joint study said Wednesday.

The rationalisation call, the study said, is reinforced by the fact that telcos reeling under a Rs 3.8 lakh-crore debt burden have been lately hit by a tariff war unleashed with the entry of a major player.

The Assocham-KPMG study does not name Reliance Jio Infocomm but appears to be alluding to the company, which is the sole major player to have recently entered the telecom turf.

Simplification of taxes and levies, it said, would also be in line with the sector regulator’s twin suggestions of a reduction in licence fees and Universal Service Obligation Fund (USOF) charges from 8% and 5% to 6% and 3% respectively.

In an official statement, Mr P Balaji, Chairman of Assocham’s National Council on Telecommunications, and also Vodafone India's director-regulatory, external affairs & CSR, said the chamber is confident the “government would support” this endeavour.

The joint study builds a case for rationalisation of taxes/levies since telecoms is one of the top contributors to GDP, likely to bring in Rs 14 lakh-crore by 2020.

The telecom sector, it said, is stung by a slew of taxes and other charges, including corporate tax and VAT, adding that SUC rates too in India were higher than other countries.

A quick resolution of these issues would also facilitate ease of doing business and help the telecom industry realise the government’s vision on Digital India.