Abolish Customs Levy On Telecom Infrastructure Gear

New Delhi | Updated: Jun 29 2004, 03:00am hrs
The Association of Unified Telecom Service Providers of India (AUSPI) formerly Association of Basic Telecom Operators (ABTO) has asked the government to abolish customs duty on telecom infrastructure equipment as well as on mobile handsets (including fixed wireless terminals).

Since the equipment is not manufactured in India, there is absolutely no rationale for levying countervailing duty (CVD), which artificially pegs higher costs on the operators, AUSPI secretary general SC Khanna said.

AUSPI is asking for zero duty on handsets to curb the grey market, said Mr Khanna, adding that the association in a letter listing its budget recommendations written to communications and information technology minister Dayanidhi Maran has also asked that service tax on telecom services be reduced to bring down the costs to the consumers.

Higher service tax would ultimately result in higher telephone bills which will affect affordability and usage, directly impacting teledensity adversly, AUSPI told the minister.

Interstingly, AUSPI prefers relief on duties over service tax if the government has to chosse between the two.

In case, due to compelling reasons of revenue generation constraints, the government is to keep service tax at existing levels or increase it from the present level, it must remove all duties to push down the costs so that net incidence on the end consumer is unchanged, Mr Khanna said.

The industry body has also asked for MODVAT credit on their capital equipment purchases against their service tax liability beside requesting continuity of tax holiday under section 80IA of the Income Tax Act for telecom infrastructure projects to be rolled out by March 31, 2006.

The removal of anomalies so that the telecom sector is at par with other infrastructure sectors has also been sought.

AUSPI has also asked for reduction in excise duty for indigenously manufactured products.

The association has suggested that broadband services should be exempted from service tax and accorded national priority as an essential service just like electricity and water.