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KOLKATA: The finance ministry on Friday asked phone companies cut prices of telecom services by rejigging costs to factor in the benefits of increased tax<\/a> credits that would available once the goods & service tax (GST<\/a>) regime is implemented from July 1.\n
\n“Telecom companies<\/a> are required to re-work their costing and credits availability, and rejig their prices and ensure the increased availability of credit is passed on to customers,” the finance ministry said in an official statement.
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\nAccording to the ministry, additional input tax credits (that the telcos would enjoy) under the GST regime would be “as much as 2% of the turnover of the telecoms industry<\/a>”.
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\nTelcos, it said, would clearly benefit under GST. \"At present, they are neither eligible for credit of VAT paid on goods nor of special additional duty (SAD) paid on imported goods\/equipment, but under GST, they would avail of integrated GST (IGST) paid on domestically procured goods as also imported goods,” the finance ministry said.
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\nMobile carriers, however, disputed the government’s observations, asserting that the increase in GST rate for telecom services to 18% from 15%, is far more than the effective rise in tax credits. Such a scenario, they said, would see postpaid users shelling out 2-3% more on their monthly phone bills, while prepaid users would see a reduction in their talk-times once GST kicks in.
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“The notion that the increase in the (GST) rate of 3% is by and large getting compensated by a reduction of cascading tax costs (on account of the fact that state VAT, entry taxes and SAD on procurements have been subsumed) is misconceived. The total quantum of benefit accruing to telecom companies<\/a> on account of reduction in cascading taxes is on an average merely around 0.7-1% of revenues,” said Rajan Mathews, director general of Cellular Operators Association of India (COAI), which represents the country’s top phone companies, including Bharti Airtel, Vodafone India, Idea Cellular and new entrant, Reliance Jio Infocomm.
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\nThis, he said, is since “bulk of the tax costs incurred by telcos for procurement of goods is central sales tax (CST) which is at the rate of 2% against C forms and entry tax is applicable only in selective states”.
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\nAccording to Mathews, the value of such procurements is in single digits as compared to revenues. Furthermore, a number of key inputs such as diesel, electricity duty etc. that are consumed by telecom companies continue to be outside the GST regime, which is why, the telecom sector would continue to reel under significant cascading taxes even under the GST regime.
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\nA tax expert at a Big Four consulting firm backed the view, saying the total benefit by way of increased tax credits to most telecom companies is unlikely to exceed 0.5% of revenues as against the increase in the tax rate by 3%, which would compel telcos to raise call charges and data rates, post-July.
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\nMathews had recently said that a higher GST rate of 18% would make telecom services more expensive and further stress an already bleeding sector.
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\nThe finance ministry, however, maintained that telcos would enjoy the benefits of full input tax credits (ITCs) under the GST regime, which they do not currently enjoy.
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\nFrom July, “telecommunications services will attract 18% GST, which is a pure value added tax (VAT) as full ITCs of inputs and input services used in the course or furtherance of business by the telecom service providers would be available,” said the ministry.
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\nFurther, it said, telcos can also avail of input tax credits of service tax paid on assignment of spectrum by the government in calender 2016 for a period of three years.
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\nAccording to the government, since the entire credit can be taken in the same year under the GST regime, the balance two-third credit of the previous year would be admissible in the current financial year itself”.
\nSuch multiple incentives, it said, would hugely benefit telecom companies, in that, their liabilities to pay GST through cash would stand reduced to about 87% of what they paid last fiscal.
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\nBut Mathews rubbished the finmin's views, saying “it was preposterous to state that the perceived benefit of taking credit in the same year instead of over a period of 3 years had reduced the cost of telecom companies, given the miniscule amount of interest benefit that would actually come out of it over the current quantum of input tax credits”.<\/body>","next_sibling":[{"msid":58859172,"title":"Fitch affirms Bharti Airtel rating","entity_type":"ARTICLE","link":"\/news\/fitch-affirms-bharti-airtel-rating\/58859172","category_name":null,"category_name_seo":"telecomnews"}],"related_content":[],"msid":58861608,"entity_type":"ARTICLE","title":"Govt asks telcos to lower prices after GST benefits","synopsis":"At present, telecommunication services attract service tax of 14 per cent along with Swachh Bharat Cess and Krishi Kalyan Cess of 0.5 per cent each.","titleseo":"telecomnews\/cut-prices-pass-gst-benefits-to-customers-government-tells-telecom-operators","status":"ACTIVE","authors":[{"author_name":"Kalyan Parbat","author_link":"\/author\/4437\/kalyan-parbat","author_image":"https:\/\/etimg.etb2bimg.com\/authorthumb\/4437.cms?width=100&height=100&hostid=268","author_additional":{"thumbsize":true,"msid":4437,"author_name":"Kalyan Parbat","author_seo_name":"kalyan-parbat","designation":"Assistant Telecom Editor at the Level of Senior Assistant Editor","agency":false}}],"Alttitle":{"minfo":""},"artag":"ETTelecom","artdate":"2017-05-26 22:01:30","lastupd":"2017-05-26 22:50:15","breadcrumbTags":["GST","industry","Tax","Indian telcos","telecom companies","GST implementation"],"secinfo":{"seolocation":"telecomnews\/cut-prices-pass-gst-benefits-to-customers-government-tells-telecom-operators"}}" data-authors="[" kalyan parbat"]" data-category-name="" data-category_id="" data-date="2017-05-26" data-index="article_1">
加尔各答:财政部周五问电话公司降价的电信服务调整成本因素增加的好处税一旦可用额度,将商品和服务税(销售税从7月1日)机制实现。”电信公司需要返修的成本和信贷可用性,和调整价格,确保信贷可用性的增加转嫁给客户,”财政部在一份官方声明中说。
据,额外的输入税收抵免(电信公司将享受)消费税政权将“尽可能多的电信的营业额的2%行业”。
电信公司,它说,显然在销售税中获益。“目前,他们既没有资格获得信贷的增值税支付商品和特殊的附加职责(SAD)支付进口货物/设备,但是在销售税,他们会利用集成销售税(IGST)也在国内采购的商品支付进口商品,”财政部说。
然而,移动运营商有争议的政府的观察,声称销售税的增加率为电信服务从15%到18%,远远超过了有效的税收抵免。这种情况下,他们说,将邮资已付的用户付2 - 3%每月手机账单,而预付费用户将减少他们的通话一次销售税。
”的概念(销售税)增加3%的速度是大体上被减少税收成本的级联补偿(国家增值税的事实,进入采购已经包含税和悲伤)都被误解了。的总量子增加额中获益电信公司的级联税收的减少仅仅是平均约0.7 - -1%的收入,”Rajan马修斯说,印度手机运营商协会总干事(COAI),代表这个国家最大的电话公司,包括Bharti Airtel,沃达丰印度、细胞和新进入者,依赖Jio Infocomm。
以来,他说,“大部分的税收费用由电信公司采购货物是中央营业税(CST)的速度2% C形式和入口税只在选择性适用的国家”。
据马修斯,等采购在个位数的价值相比,收入。此外,许多重要的输入如柴油、电力责任等由电信公司继续消耗消费税制度外,这就是为什么,电信部门将继续卷下重要的级联即使在消费税税收制度。
四大咨询公司税收专家支持的观点,说的总收益的增加税收抵免对大多数电信公司不太可能超过收入的0.5%作为对税率的增加3%,这将迫使电信运营商提高打电话的费用和数据速率,post-July。
马修斯最近表示,更高的销售税18%将使电信服务更昂贵的和进一步的压力已经流血的部门。
然而,财政部坚称,电信公司将享受的好处全部输入税收抵免(itc)消费税制度,目前他们不享受。
从7月”,电信服务将吸引18%的销售税,这是一个纯粹的增值税(增值税)作为完整的异硫氰酸酯的输入和输入服务过程中使用或促进电信服务提供商的业务将是可用的,”部长说。
此外,它说,电信公司也可以利用输入服务税收抵免税收支付2016年日历由政府分配的频谱一段三年。
据政府,因为整个信贷可以采取同年消费税税收制度下,2/3的信贷平衡前一年将容许在当前财政年度本身”。
等多种激励措施,将非常有利于电信企业,负债通过现金支付销售税将减少约87%的他们去年财政支付。
但马修斯对finmin的观点,说“这是荒谬的状态感知的好处同年采取信贷,而不是在一段3年的成本降低了电信公司,考虑到微不足道的利益好处会走出了当前量子输入税收抵免”。
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