sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
General »
 Budget 2019: This Budget could have some surprises in store
 Income Tax return processing time to reduce from 63 days to just 1 day
 Govt eases norms for start-ups seeking exemptions from 'angel tax'
 Maximise tax savings using health insurance for yourself and family
 FinMin considers steps to prevent composition dealers from charging GST from buyers
 Do-it-yourself online filers may need to ask for some help this tax season
 Do we need composition scheme in GST for real estate?
 Here's how you can claim tax benefit on a top-up home loan
 Year-end tax tips to get you ahead of the season
 Manual filing allowed for tax cut at lower/nil rate
 Income tax return filing: I-T dept allows manual filing by resident, NRI taxpayers

Tax relief notice for new telcos
June, 13th 2009

The Indian telecom market has emerged as one of the fastest growing in the world. India's subscriber base has crossed 440 million and telecom operators are adding a whopping 8-10 million new subscribers each month.

Having said that, there is still substantial scope for further growth in this sector considering that teledensity is only 37% in India. The telecom industry is keenly awaiting the Union Budget, to be presented by Pranab Mukherjee, hoping that it would address some of the long standing issues adversely impacting this sector.

Discussed below are key pain points of the telecom industry from a tax perspective:

The telecom industry is subjected to a host of taxes/levies including service tax, license fees and spectrum charges and state levies such as octroi, VAT, stamp duty, entry tax, etc, apart from corporate income-tax. All of this aggregates to around 30% of their total revenues! The long-standing industry expectation is the rationalisation of the multiple levies into a unified levy, which would relieve the telecom companies of compliances under multiple regulations as also from the spate of litigation surrounding these levies.

Telecom operators were eligible for a tax holiday (u/s 80IA of
the IT Act) on their telecom revenues for 10 years, for operations commencing prior to March 31, 2005. The tax holiday should be  re-introduced to provide a level playing field to new players. Also, in 2007, the government enacted a provision denying tax holiday to undertakings, post transfer, in a merger. The denial of tax holiday should be done away with to enable tax efficient M&A activity in this space.

There is an on-going controversy on whether SIM cards sold by telecom companies through distributors and whether value-added services are exigible to service tax or VAT. A specific clarification is called for to settle this controversy.

Excise duty paid on equipment is allowable as a set-off against service tax liabilities only if the equipment is installed in the company's premises. Most of the telecom equipment (such as towers, routers, cables, modems, handsets, etc) would be located outside the company's premises, disentitling operators to the benefit of the set-off. The Budget should introduce specific provisions enabling such set-off.

Affordability with quality has been the hallmark of the Indian telecom success story. Prudent fiscal legislation and administration would definitely push the growth to greater heights in India.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2019 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Company Overview

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions