Telcos call for 5% duty cut on fixed wireless terminals

NEW DELHI: Basic telecom service providers have sought reduction of custom duties on fixed wireless terminals (FWT) to 5% from 10%. FWTs are used by basic telecom operators to provide fixed telephone connections, using CDMA technology.
Currently, there are more than 1.4m fixed wireless connections in the country. At present, fixed wireless terminals are subjected to 27.8% of total duties, which comprise 10% basic customs duty and 16% countervailing duty (CVD), while a concessional rate of 5% basic duty is levied on mobile handsets, without any CVD.
The Association of Basic Telecom Operators (ABTO) has submitted its pre-Budget recommendations to the department of telecommunications (DoT) and the finance ministry. It has said that the FWT should be treated on par with mobile phones, as they work on the same technology. ABTO has also sought customs duty of 5% on all telecom equipment, down from the current basic customs duty of 10% or 20%. It has also called for inclusion of items critical for provision of broadband service in the list.
The association has also demanded that the benefits of zero import duty be extended to mobile switching units, imported by cellular operators. The same is not applicable to mobile switching units imported by basic operators. Now that the basic service operators have acquired unified access licences that allow them to offer full mobile services, just like GSM-based operators, the duties levied should be similar.

Basic operators have also requested that CVD should not be levied on imported telecom infrastructure equipment that is not manufactured in India. Currently, most of the telecom infrastructure equipment and FWT are subjected to a CVD of 16%. The telecom body has called for an excise duty of 8%, instead of the present 16%, so that domestic manufacturers get a boost. ABTO wants a value-added tax (VAT) regime, instead of service tax for the telecom sector.
In case the service tax is continued with, it should be pegged at 4%, down from the current levels of 8%, according to ABTO. The VAT paid by the telecom sector on their capital equipment purchases should be available as credit against their service tax liability.