Telecom industry seeks licence fee cut, GST relief in Budget 2026

telecom

• Telecom operators urge lower licence fees and tax relief in Budget 2026–27
• COAI seeks GST reforms and suspension of Digital Bharat Nidhi contributions
• Industry warns high levies may hinder 5G expansion and digital infrastructure

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India’s top telecom operators have sought sweeping fiscal relief in the upcoming Union Budget 2026–27, arguing that heavy regulatory levies and tax outflows are constraining their ability to fund 5G expansion and future network upgrades critical to the country’s digital ambitions.

The Cellular Operators Association of India (COAI), which represents Reliance Jio, Bharti Airtel and Vodafone Idea, has proposed a sharp reduction in licence fees to 0.5%–1% — from the current effective levy of 3% of adjusted gross revenue (AGR) — saying this would sufficiently cover administrative costs. Operators also contribute 5% of AGR to the Digital Bharat Nidhi.

S.P. Kochhar, Director General of COAI, said the suggested measures would be revenue neutral for the government while significantly easing cash-flow pressures on telecom companies. Lower statutory payouts, he said, would release capital for network densification, faster 5G rollouts and investments in next-generation technologies aligned with the Viksit Bharat vision.

The industry body has further urged the government to suspend additional contributions to the Digital Bharat Nidhi until the existing unused corpus is fully deployed by the Department of Telecommunications, arguing that continued collections are straining operator finances without proportional sectoral gains.

GST reforms form another pillar of the industry’s Budget wish list. Telecom companies face a persistent build-up of unutilised input tax credit (ITC), particularly linked to spectrum payments and regulatory levies. To address this, COAI has proposed exempting licence fees, spectrum usage charges (SUC) and auctioned spectrum payments from GST.

Alternatively, it has suggested reducing GST under the reverse charge mechanism on these payments to 5% from the current 18%. According to the association, such a move would curb ITC accumulation while remaining revenue neutral. It has also recommended allowing operators to offset GST liabilities under the reverse charge mechanism against accumulated ITC, thereby reducing cash outflows and improving liquidity.

Beyond immediate tax relief, COAI has called for a broader recalibration of spectrum pricing and assignment frameworks. The association noted that telecom networks now function as foundational infrastructure supporting sectors ranging from manufacturing and healthcare to fintech and digital governance. In this context, spectrum policy must prioritise affordability and long-term sustainability to ensure continued investment in digital infrastructure.

The industry maintains that without rationalisation of levies and GST burdens, telecom companies will struggle to sustain the high capital expenditure required to expand coverage and enhance service quality. As the government prepares the Budget for 2026–27, it faces the task of balancing fiscal considerations with the need to accelerate India’s digital transformation agenda.