The Ministry of Finance has said the operators will be permitted to carry forward unavailed Cenvat credit to the GST regime. The decision of the ministry has brought relief to the beleaguered telcos which are already reeling under severe financial stress. To implement the decision taken by the ministry by enabling service recipients to carry forward such unavailed credit of Service Tax under the GST regime, the Revenue Department has amended the Cenvat Credit Rules, 2004, reported news agency PTI.
According to a statement issued by it, as a result of the decision, telecom service providers who have been allotted spectrum in auction conducted in 2016 and have already availed one-third credit in respect of Service Tax paid by them, during 2016-17, would be eligible to take the remaining two-thirds credit pertaining to 2016-17 in the GST regime.
Meanwhile, banks have raised concern over the telecom sector whose debt burden stand at a whopping Rs 4.6 lakh crore. In a meeting on Wednesday, officials of State Bank of India, Punjab National Bank, Axis Bank and HDFC Bank met an inter-ministerial group (IMG). On the occasion, the officials said that the telecom sector may be in stress and there can be defaults. The meeting that continued for around two-hours, the officials talked about measures that can be taken to enhance liquidity.
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The government proposes to roll out the Goods and Services Tax (GST) from July 1. GST will subsume excise, service tax, VAT and other local levies.
Billionaire Mukesh Ambani entered the Indian telecom market by launching Reliance Jio and while this benefitted subscribers who got free data and voice packs and this was followed by cheap tariffs, it put revenue and profitability of all telcos under stress, as per PTI.