Tax reforms, regulatory relief: Indian telecom's call to action in Union Budget 2024-25

With India's rapid stride in the global 5G rollout, the telecom industry finds itself at the forefront of technological advancement.

By Lt. Gen. Dr. S.P. Kochhar

As India rapidly evolves into a digital economy, the telecom industry emerges as an indispensable thread, connecting people, communities and even things. As an omni-channel enabler of daily interactions and transactions, telecom has become a cornerstone of economic growth in our nation. In this context, we have been a consistent advocate for reforms, understanding the urgency of eliminating the roadblocks in the growth of the industry. We hope that the upcoming interim Budget, planned ahead of the 2024 Lok Sabha Election, not only addresses the existing challenges faced by the telecom sector, but also propels it towards a resilient and financially robust future.

With India's rapid stride in the global 5G rollout, the telecom industry finds itself at the forefront of technological advancement. By achieving the fastest 5G rollout globally, the Indian telecom industry has showcased its potential to drive the vision of a digitally empowered India. We are also marching ahead in the 6G race thanks to the indigenous Bharat 6G Vision nurtured by our great visionaries and industry representatives. We hope the forthcoming Budget will acknowledge these and address the industry’s requirements by adopting a favourable tax regime and other supportive measures, in continuance of the progressive, reforms-based approach adopted by the government in recent years.

To address the aspect of high regulatory levies on the sector, we have suggested the abolition of the Universal Service Obligation Fund (USOF) levy, ideally. In case that is not possible, the USO contribution must be suspended till the existing USOF corpus is exhausted. Additionally, we are advocating for a reduction in license fee from 3 percent to 1 percent, to cover only administrative costs by the Department of Telecommunications (DoT)/government.

The industry earnestly urges the DoT to initiate a comprehensive consultation process on the matters surrounding adjusted gross revenue (AGR). It is crucial to ensure that revenue generated from activities not requiring a license is explicitly excluded from the gross revenue calculation. This adjustment will contribute significantly to creating a fair and balanced regulatory framework for the telecom sector, aligning with the industry's evolving dynamics and challenges.

Similarly, in the direct taxes segment, we urge the introduction of a special regime under Section 72 of the Income Tax Act, allowing telecom operators to carry forward and set off business losses for 16 assessment years, instead of 8 years. This becomes particularly relevant in the face of the challenges faced by the industry, including the Supreme Court’s rulings on AGR matters.

(Lt. Gen. Dr. S.P. Kochhar is  Director General Cellular Operators Association of India )