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GST Telecom Industry - Treatment of cross-border taxation of telecom services

Services becoming subject to levy of State GST, in addition to Central GST (unlike subject exclusively to Central Levy under the existing regime), the determination of taxing jurisdiction under SGST attains considerable significance.

For example, if a person resident in Delhi travels to Mumbai and avails roaming services, there would arise an issue as to which state should get the revenue and how practical and administratively possible it would be to go by the destination principle.

Further, the telecom services are typically rendered by operators located centrally, but the services are spread across the country. GST being a destination based consumption tax, determination of the State where consumption takes place will become a major area of concern/ litigation in case of cross border services.

Proposal: Considering the need for keeping GST rate on telecom services low and considering the serious administrative/ implementation issues of taxing cross border services of this sector, it will be an administratively most appropriate and suitable option to subject the telecom service only to Central GST.

In the alternative, the place of supply rules for taxing services based on billing address of the service recipient (i.e. destination-based model should be adopted instead of place of effective use and enjoyment.


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