Budget 2018-19: Government needs to rethink its stand regarding customs duty on equipment says COAI

NEW DELHI (INDIA): India’s Finance Minister Arun Jaitley will present the Union Budget for 2018-19 on 1st February.This would be his third full-year Budget. So all eyeballs on his briefcase, what Jaitley is going to present for India.

Lets go through Cellular Operators Association of India (COAI), the apex body of Telecom Service Providers (TSPs) in the country ) Director-General, Rajan S. Mathews pre-budget expectations from Jaitley.

In the upcoming Union Budget, telecom sector is eagerly waiting for some breather and while it has a lot to ask for, below are some key points for which it has made several representations to concerned government departments,”

1. Customs duty Exemption for LTE Equipment required for 4G network and telecom devices

The country cannot afford to lose out in the race of technological up-gradation of the entire eco system, which is the objective of the other equally important initiative of ‘Digital India’. The telecom sector is the biggest supporter of indigenous manufacturing. However, till such time as quality products at a competitive price are available in the country, the government needs to rethink its stand regarding customs duty on equipment, to ensure timely roll-out of networks.

2. Tax Withholding on Distributors’ margin on SIM cards and prepaid vouchers

The issue of tax withholding on discounts extended to pre-paid distributors needs immediate attention. It is important to understand and appreciate that the discount extended to pre-paid distributors is not a commission, as these distributors do not act as agents of telecom companies. However, in order to bring the ongoing litigation to an end, given the low margins earned by the distributors, a lower withholding tax rate of 1% may be prescribed for telecom distributors.

3. Taxability of Right of Way by local bodies

Government introduced the Right of Way (RoW) rules to standardise processes and fix charges regarding setting up telecom infrastructure including towers and optical fibre cables. But poor implementation and lack of clarity has only resulted into a number of litigation and disputes with the local authorities.

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