The Telecom Regulatory Authority of India has pitched for reduction in the GST rate for telecom services to 5% from the current 18% decided by the GST Council, and recommended a cut in levies such as license fee and spectrum usage charges.
The recommendations follow a meeting between the regulator and telcos on June 15 to discuss the financial health of the industry that is currently sitting on a debt of ₹4.6 lakh crore.
In a letter to the Telecom Secretary Aruna Sundararajan, TRAI Principal Advisor S.K. Mishra has said that the regulator finds “considerable merit” in the industry’s proposal to treat the sector and core infrastructure sector and reduce the GST rate as this would be in the interest of end consumers and would help realise the goal of Digital India.
Ms. Sundararajan is also the chairperson of Telecom Commission, which is the highest decision making body in the Department of Telecommunications (DoT).
Economy enabler
TRAI has said that DoT “may consider actively taking” 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. “On several other issues like levies of licence fee, Universal Service Obligation (USO) Fund, spectrum charges, promotion of wireline infrastructure etc, the authority in the past has already given its recommendations to the government,” Mr. Mishra said in the letter.
TRAI had earlier recommended reducing USO levy to 3% of the adjusted gross revenue from the current 5%. With this reduction, the applicable uniform rate of license fee would become 6% from the present 8% of the adjusted gross revenue.
In their meeting with the regulator, the operators had raised concerns over differential spectrum usage charges (SUC) as there was no uniformity in the SUC for different telecom operators.
The telcos had “argued that 2010 onwards the spectrum is being auctioned and high bid amount is being paid to acquire the spectrum…They also added that besides this other levies/fees are also being levied on the telcos so there is an urgent need that SUC should be reduced to the level of recovery of the administrative cost of the spectrum management.”
Spectrum charges
TRAI also recommended a relaxation in payout for auctioned spectrum. At present, operators pay 25% or 33% as upfront charges of total spectrum price and the remaining is paid over a ten-year period after a moratorium of two years.
For spectrum payments in 700/800/900/2100/2300/2500 MHz bands, TRAI has suggested 10% of the bid amount as initial payment with remaining payment spread over 18 years (18 equal instalments with interest).
On the issue of interconnect charges and ease of doing business, TRAI said it has already issued consultation papers on these issues and will come up with recommendations based on the consultation process.
