Budget 2018 Podcast: What are the expectations of the telecom sector?

Budget 2018 is just 10 days away and Arun Jaitley is the man at the centre of it all. The telecom industry has been in the news all year, with news of mergers and some pretty stiff competition between the main players.

Telecom companies feel financial stress levels in the sector would abate significantly if the budget allows for cuts in key telecom charges like spectrum usage charges, licence fee and Universal Service Obligation Fund or USOF fees.

Further, sizeable customs duties on 4G network gear and connectivity devices used in modern technologies like internet of things (IoT) and machine-to-machine (M2M) communication services are a major pain point for telecom players. Another is anomalies in withholding taxes relating to the prepaid services. The telecom industry hopes these issues are addressed in the upcoming budget.

The levies can get uncomfortably high, according to the companies. Up to 30% of every Rs 100 a telco earns is paid to the government. A reduction in these could help improve the financial health of a debt-laden telecom sector. It will also allow telcos to deliver voice and data services at cheaper prices.

Telecom tower infrastructure companies have suggested that telecom towers be included within the scope of the definition of "plant and machinery" under GST to enable tower operators to get the benefit of input tax credits.

Tower companies are hoping for the inclusion of the telecom towers sector in "specified business" to avail tax benefits under Section 35AD of the I-T Act for equipment manufactured in India. This could lower the cost of services offered by telecom infrastructure providers. The towers industry invests more than Rs 10,000 crore annually in equipment and machinery manufactured in India.