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Telcos search service tax waiver on AGR dues


NEW DELHI: Telecom operators‘ physique COAI has approached the finance ministry in search of waiver of service tax on adjusted gross income (AGR) dues to be paid to the federal government.
The telecom operators have been paying service tax after which GST underneath the reverse cost mechanism (RCM) on licence fees (LF) and spectrum utilization costs (SUC) made to the division of telecom (DoT) for the interval beginning April 1, 2016.
The trade paid round Rs 6,600 crore between April 2016 to March 2017 in money to discharge its output service tax legal responsibility, the Mobile Operators Affiliation of India (COAI) mentioned in a letter to the ministry dated July 17.
“Telecom sector shouldn’t be burdened with service tax legal responsibility resulting from incremental LF and SUC payable pursuant to the SC determination, as it’s going by way of difficult occasions,” COAI Director Basic S P Kochhar mentioned within the letter.
When contacted, COAI didn’t touch upon the matter.
The trade physique’s members embrace Reliance Jio, Bharti Airtel and Vodafone Idea.
The Supreme Courtroom had in October final yr upheld the federal government’s place on together with income from non-telecommunication companies for calculating the annual AGR of telecom companies, a share of which is paid as licence and spectrum charges to the exchequer.
Kochhar mentioned whole service tax payable underneath RCM on licence charges and spectrum utilization costs, even after contemplating incremental demand as a result of apex courtroom determination, would have been lower than Rs 2,000 crore.
COAI mentioned had the trade identified in regards to the incremental demand of LF and SUC, it will have thought of the identical for computing the quantity to be paid underneath RCM.
Consequently, the output service tax legal responsibility paid in money at the moment would have lowered by a corresponding quantity.
“The trade is a entrance runner in contributing to the Indian financial system by way of cost of charges, taxes, producing employment and so on. This can be evident from the truth that within the final 5 years, telecom operators have cumulatively paid service tax and GST of roughly Rs 2 lakh crore,” Kochhar mentioned.
In accordance with COAI, along with the taxes, telecom gamers have paid regulatory charges within the type of LF and SUC of roughly Rs 87,000 crore within the final 5 years.
COAI mentioned the telecom sector employs virtually 22 lakh individuals straight and 18 lakh not directly. It has the second largest non-public sector funding in infrastructure at about Rs 11 lakh crore.
“Contemplating the criticality of this sector to the general financial system and ecosystem, it mustn’t solely be secured from any opposed impression however be prolonged some consideration, particularly the place the aid doesn’t lead to any lack of tax to the federal government,” Kochhar mentioned.
COAI mentioned the trade debt as on March 31, 2019 stood at Rs 6.7 lakh crore. AGR has declined by about 14 per cent from Rs 39,585 crore for the quarter ended March 2017 to Rs 34,136 crore for the quarter ended March 2019.
“The request to not implement Service tax legal responsibility within the given case can be made on account of the truth that being income impartial, it doesn’t trigger any lack of tax to the federal government. If such Service tax is to be paid, it will additional block the working capital,” Kochhar mentioned.


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