New Delhi, 28th February 2013: The announcement of the Union Budget 2013, left the telecom sector deeply disappointed as none of the critical issues relating to the sector have been addressed, stated Cellular Operators Association of India. Detailed pre-budget recommendations were made to Ministry of Finance by COAI and the need to provide telecom with the status of infrastructure, lowering of multiples taxes and levies in the face of the poor financial health of the sector and the need to boost investor’s sentiment, were some of the most pressing and important submissions. Though, the Finance Minister emphasized the Government’s objective of inclusive and sustained growth as well as financial inclusion, the sector which is vital for achieving the stated goals has again been deprived of the much required relief.
Grant of infrastructure status for telecom service providers has been a long pending request of the industry which has again not been met. The same would have provided the much needed boost to the telecom sector which is capital intensive and is presently starved for funds. The sector continues to be plagued with multiple levies and nothing has been done to rationalize levies on the sector. Moreover a wide array of services such as games, wallpapers, ring tones, etc., have been categorized as ‘entertainment’ by certain taxing jurisdictions, which makes these companies liable to pay entertainment tax. However, since service tax is already being paid on these transactions, this leads to double taxation for the players, who pay both entertainment tax as well as service tax.
The continued ignoring of the industry’s legitimate needs, puts at grave risk, the achievement of many of the objectives outlined in NTP-2012, such as Broadband for all, Rural penetration, roll out of 3G, 4G/LTE, etc. These require substantial investments which would have benefited from the requests sought by the industry. The focus appears to be to continue to milk the industry of its remaining resources – a move which reduces the industry from being the poster boy of growth to now being the whipping boy – a sad commentary indeed!
