gst in india  


VAT Service Tax India
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Justification of GST
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Goods & Services Tax Model For India
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Implementation of GST

GST Telecom Industry - GST rate on telecom services

The impressive growth of telecom sector has positively impacted service tax collection. Telecom services are now the single biggest contributor to service tax revenue.

India has a much higher incidence of Tax on telecom services when compared to other countries. A comparison of Taxes levied by different countries on telecom services is produced below (the below mentioned charges are % with respect to revenue after specified adjustments)

Service
Tax,
GST/VAT
10.30% 3% 5% 12%
License
Fee (incl.
USO)
6-10% Nil 1.50% of gross
adjusted
revenue
0.3% Turnover +
1% of Capital
invested
Spectrum
Charges
2% to 6% + 3.95%
of gross adjusted
revenue for
microwave access
& backbone
~0.5 (China
Mobile)
Nil ~1.1% of
Turnover
Total
Regulatory
/ tax
Charges
22% to 30% 3.5% 6.50% 1.4% of turnover
+ 1% of invested
capital + 12%
VAT

Thus the total incidence of taxes borne by the telecom sector ranges from 22% to 32% taking into account the service tax rate of 10%. While the proposed GST regime subsumes many indirect taxes levied by the Central and State Governments, it is a matter of fact that the GST regime does not propose to subsume any of the telecom specific charges/fees. Considering that most of the new subscribers will be added from “bottom of the pyramid” and rural areas it is imperative to keep costs low. The telecommunications services being a key catalyst for inclusive growth lends added importance attached to the sector and the high incidence of telecom specific fees, it becomes increasingly important to keep the rate of GST low on telecom services.

Proposal: In view of the above, the GST incidence on telecom services be maintained at current level of Service Tax and should not be increased.

 

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