Finance minister P Chidambaram?s Budget didn?t find favour with the telecom service providers who were left high and dry by the absence of any reference to ?unifying the multiple tax structure? on their revenues, which amounts to almost 30% of their adjusted gross revenues (AGR).
This despite the finance minister announcing in last year?s Budget about constituting a committee to address the issue. In fact, a committee along the lines was constituted and has been working on the matter.
The Budget also ignored the telecom industry?s long-standing demand of bringing the license fee to a uniform 6% of the AGR from the current slabs where the industry pays a revenue share licence fee of 10% for metro and category A circles, 8% for category B and 6% for category C circles.
Telecom operators pay 27% of their revenue in the form of various levies, which apart from the licence fee includes, 12% service tax, 4% spectrum charges and other state specific levies such as octroi and sales tax. The operators have been clamouring for a single tax structure in order to bring down the tax rate to around 6%, in tandem with the global tax rates.
The mobile operators had urged the DoT that any benefits arising as result of a reduction in levies will be passed on to the consumers.
The disappointment of the operators can be gauged from the fact that while ignoring any move towards reducing the levies, the Budget levied a % duty on mobile handsets, which is likely to make the same expensive.
?The 1% duty on mobile phones is going to burden the middle class and affect the affordability of rural India, we are soon going to make a joint appeal to the finance minister to withdraw this duty,? said S C Khanna, secretary general, Association of Unified Telecom Service Providers of India. Meanwhile, the government received a whopping 12,499.43 crore as telecom license fee in 2007-08, which is 25% higher than the expectations. Last year the government received 8,799 crore as licence fee.
