Budget 2023: Telecom sector seeks waivers for expansion of 5G network

Budget 2023 – The development of infrastructure, particularly in relation to the deployment of 5G networks and the improvement of internet connectivity in rural regions, is something that the telecom industry has stated it wants the government to assist. Since the telecom industry is one of the most heavily regulated in the nation and has members like Vodafone Idea, Bharti Airtel, and Reliance Jio, the Cellular Operators Association of India (COAI), the country’s top telecom lobby, has stated that it anticipates tax and regulatory relief for telecom operators to encourage the flow of investment in the sector.

“To keep up with the growing demand for connection, the telecom sector needs to invest in a strong and dependable communication infrastructure. The burden of levies on the industry must urgently be reduced “S P Kochhar, the director general of COAI, said.

Here are a few critical suggestions made by the sector to the government in advance of the Budget in order to support the development of the telecom sector.

Suspension of regulatory levies: According to COAI, until the current USO corpus is depleted, the government should think about suspending the USO contribution of 5% of AGR (adjusted gross revenue). The Department of Telecom or the government should reduce the licence fee from 3% to 1.5% in order to simply pay administrative expenses.

“The prevailing licencing charge is 8% of AGR, with a 5% levy going to the USO Fund. The current USO Fund corpus, which is more than Rs 59,000 crore, is enough to cover USO goals for the foreseeable future. Contributions to USO may be suspended until the current corpus is used, according to COAI.

Additionally, it has urged that the definition of Gross Revenue (GR) explicitly state that revenue from non-licensing activity is not to be included in GR.

Budget 2023

Changes to the tax code: The organisation has urged that telecom operators be given a preferential tax treatment under Section 72 of the Income Tax Act of 1961. According to this, the board stated that corporate losses can be carried over and written off for a total of 16 assessment years, up from the current eight.

In addition, COAI has requested that the existing TDS rate of 5% for telecom distributors under Section 194H of the Income Tax Act be reduced to 1%.

IP radios, LTE goods, optical transmission equipment, and other types of telecom equipment are currently subject to a standard 20% customs duty.

“Telecommunication businesses’ ability to operate profitably is being disrupted by higher customs duties on telecom equipment. Telecom equipment should be exempt from BCD, it was noted.

“Customs duties for 4G/5G related network devices, along with other related products, should be lowered down to nil until good quality equipment is available in India at competitive pricing,” COAI added.

It also emphasised the need for the government to make tariff and exemption announcements, which need for a precise classification, clearer.

In order to make it easier for industries dispersed across all states and Union Territories to conduct business, COAI has requested a centralised registration process for the Goods and Services Tax. Due to legal ambiguity, it has also suggested providing a clarification to ensure that ITC on network equipment put on towers is not rejected.

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