Telecom regulator bats for cut in GST

NEW DELHI: The telecom regulator has recommended to the government a cut in goods and services tax to 5%, spectrum usage charge to 3% and universal services obligation fund ( USOF) levy to 3% as some ways to alleviate the financial stress being faced by the debt-laden sector.

The Telecom Regulatory Authority of India (Trai), in a letter to telecom secretary Aruna Sundararajan, dated June 23, also suggested the department of telecom (DoT) extend tenure of payments for spectrum bought in auctions to 18 years, from 10 years now. Trai termed telecom as the ‘backbone of the economy’ and said it also found merit in telcos’ proposition of treating the sector as a core infrastructure one.

“Telecom service is a public utility which is being used by all sections of society and the goal of ‘less cash’ economy and Digital India is largely dependent on affordability and ubiquitous availability of telecom services. It certainly is not a luxury,” Trai’s principal advisor SK Mishra said in the letter.

“Therefore, Trai proposes that DoT may take up with the ministry of finance the issue of reduction in GST rate from 18% to flat 5% by declaring telecom sector as core infrastructure industry and economy enabler in India,” Mishra said, highlighting that affordable services would improve efficiency in education, ecommerce, e-banking and agriculture, besides aiding in proliferation of services in rural and remote areas. Trai argued that a bare minimum rate would íncentivise more investment into the sector.

While Trai underlined that issues on ease of doing business and interconnect usage charges (IUC) were already under discussion through consultation papers, it said that the reduction in USO levy to 3% of adjusted gross revenue (AGR) from present 5%, would bring down license fee to 6%, from present 8% of AGR, but the direct accrual to the government would not change.