The telecom sector is desperate to connect with finance minister Arun Jaitley before he begins finalising Budget 2016. But this time, its long list of demands boils down to two things — clearer policies and help in reducing debt. Rajan S Mathews, director general, COAI, says: "We have been so disappointed in the last several Budgets that we are not asking for any big ticket items."
It's harsh, but it's the reality. That explains why this year's Budget wishlist from the telecom sector has more requests for clarity on various policies. Particularly with regard to taxation.
First on the list is whether payments made for trading or sharing of spectrum are royalty. If not, the sector asks that the withholding tax applicable on these payments be removed.
Romal Shetty, head- telecommunications, KPMG, says: "The number of tax disputes, whether it is royalty on capital gains or spectrum trading, we need clarity on that especially in context to spectrum trading."
Speaking of withholding tax, players are also asking that withholding tax provisions on distributors' margins on the sale of SIM cards and prepaid vouchers be removed, since these are in the nature of 'commission'. The third demand, is for more clarity on how spectrum fees are to be taxed.
Hemant Joshi, partner, Deloitte, says: "There is ambiguity on how you tax the amount that is paid for spectrum. Is it subject to depreciation or amortization. If it's subject to amortization under 35AB then you get five year period. If it is subject to depreciation then you get a waiver of 25 percent and it goes on for a longer time.
While on the subject of fees, telecom players have once again submitted that they are being crippled by high licence fees and hope the finance minister can help relieve some of this burden.
Matthews says: "We are asking for reduction of the license fee and the spectrum usage charge."
The sector's wishlist is longer when it comes to relief from indirect taxes.
The demands here include: - Removal of the Swachh Bharat Cess- The introduction of a provision for maintenance of regular balance of unutilized credit to the extent of credit disputed- A reduction of the rate of interest charged on delayed payment of service tax from the current 30 percent.
Then there's the need to reduce excise and customs duties on hardware to help consumers keep up with changing technology. Shetty says: "If 4G evolution has to happen, we need handsets that are 4G enabled, so what kind of incentives can be given for 4G handset manufactures."
The demands, of course, extend beyond taxation. The biggest in this area is the creation of a specialized committee to ensure the implementation of the broadband highway connecting gram panchayats and villages.
Mahesh Uppal, founder and director, Comsfirst, says: "The implementing agencies are a group of PSUs which do not have the strategic expertise to rollout the programme. If the Budget was to announce the creation of new broadband agency that combines public sector resources with private sector expertise, I think that can bring a significant shift."
This is a sea-change from the wishlist over the last four years, which have had high hopes from the Budget — the most glaring change being the omission of the request for infrastructure status to the sector. But even if some of these demands are met, the sector says it can look forward to a slightly better 2016.
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