Mixed tax news for India’s operators 

Mixed tax news for India’s operators 

The Indian government has extended the customs duty exemption given to vessels engaged in laying submarine cables to 30 September. The exemption was originally due to end on 31 March.

Industry body the Cellular Operators Association of India (COAI) welcomed the extension – not too surprisingly, given the growing reliance on submarine cables by operators to transfer data internationally.

However the telecoms industry did not receive such good news from India's Finance Minister Nirmala Sitharaman when she unveiled this week’s interim budget, even though it contained plans to spend nearly US$134 billion on infrastructure and focus on long-term reforms to drive growth and contain the fiscal gap.

The fiscal deficit target for the next fiscal year has been reduced to 5.1% of GDP compared to the revised deficit estimate of 5.8% for the current fiscal year. The budget included no new taxes and increases in spending in areas like education, health and housing.

In addition, the interim budget did not make any changes to taxes and levies on the telecoms sector. However, that industry may be looking forward to a better result in the full budget to be presented after the elections in July.

As India’s Economic Times news service points out, the industry would like quite a lot of changes: a reduction  in regulatory levies like the license fee, deferral of the Universal Service Obligation Fund USOF contribution till the existing funds are exhausted, exemption from basic customs duty (BCD) on telecom equipment, waiving of goods and services tax (GST) on regulatory payments and refund of Input Tax Credit (ITC), among others.

Currently, the Economic Times says, operators pay 8% of adjusted gross revenue (AGR) as a license fee to the government.

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