Welcome FM’s positive stance against retro taxation
Calling for freeing of more spectrum for auction particularly in the 2100 Mhz bandwidth as well as more fiscal sops -- like direct tax concessions and tax holidays -- from the Finance Minister, the cash-strapped telecom sector has voiced concern that they deserved better attention from the new Government in the recent Union Budget.
“There was no stimulus by the FM to the sector. The industry is witnessing low profit margins and is facing tough times primarily due to high debt paid to finance the 3G & BWA auction. We were expecting a definitive roadmap for the telecom sector from the new Government at the Centre,” said Marten Pieters, Managing Director and CEO of Vodafone India and the newly appointed chairman of COAI.
He, however, refrained from commenting on the Vodafone retro-taxation issue, which was mentioned in the Budget by the FM. However, COAI Director General, Rajan Matthews said:” We welcome the move by the FM to bury the retro taxation issue.”
FM Jaitley, while presenting the Budget, had said that existing tax disputes, arising out of Retrospective Amendment to the Income tax Act, 1961, and on different level of pendency in the courts, would be allowed to reach their logical conclusions. FM had also added that the new Government was against any retro-taxation.
Pieters, who has taken over as the new Chairman on COAI, said that in the 2100 Mhz, almost 80 Mhz was lying idle and unused while only 20 Mhz was utilized. Telcos also opined that the 700 Mhz band too needed to be harvested, although industry leaders held that it was much better to develop the 3G services.
Industry observes also said that the lTE ecosystem was highly developed in India and that this required more attention from operators as well as from Government for the commercialization of the bandwidth.
In addition to this, industry represnetatives said that the Government needed to give more attention towards creating telecom infrastructure that they hold, would go a long way in assisting the sector that has been hit by low returns and high capex. Telcos have generally voiced concern over the complicated and exorbitant taxation on the sector that is already facing tough conditions.
Issues like high penalties as well as a plethora of taxes such as services taxes, licence fees, universal service obligation levy and spectrum usage charges besides municipal and state level taxes have added to eh woes of the industry.
The industry also decried lack of any direct tax concession in the Budget like the tax holidays that normally the Budget awarded to stimulate the growth of many of the infrastructure sector. To add to this the the Budget has also increased the basic customs duty on imported infrastructure at 10 per cent which the industry says, will affect their costs as the growth of the telecom infrastructure was still needed and wanting the in the country.