While at present operators shell out between six to ten per cent of their total revenues as licensing fees, the Cellular Operators Association of India, have now asked for a reduction in licensing fees to one per cent of their annual revenues for the next fiscal, and that the USO levy be de-linked from the revenue share license fee.
According to Vikram Tiwathia, chief regulator, TTSL, New Delhi, “The entire licensing fee needs to be rationalized. At present, the taxation for operators is way too excessive. In India, our present tax liability is 24-29 per cent with all the taxes put together; which is almost six to seven times more than that of other SAARC nations. With a reduction in license fee, AGR will go up - thanks to a growing subscriber base, and therefore the government would be able to earn more. Thus, tax on revenues should be brought down to about six per cent, which would include the USO levy, spectrum fee, AGR, and license fee, among other fees.”
Agreeing with him, Sandeep Keshkar, DGM – Mobile Services, MTNL, says, “As there are so many licenses, this move is totally justified, and we require an immediate reduction on taxes.”
In addition, operators have also sought a waiver on service tax for broadband and Internet services, in order to improve affordability to consumers, and thereby garner a wider subscriber base.
According to the Association of Unified Telecom Service Providers of India, “Broadband services can reach the urban and rural consumers only if services are offered at affordable rates. While announcing the broadband policy, the Minister of Communication had stated that the government would work out a package in consultation with the Ministry of Finance for reduction in fiscal levies, which would in turn result in increased costs to the end consumer.”
While Tiwathia feels that this waiver would be a boon, as a chunk of TTSL's subscriber base lies in broadband and Internet services, Keshkar feels that some amount of service tax on broadband is required.
SPs have also sought a deduction of upfront charges for 3G and broadband wireless spectrum under Section 35 ABB, requesting that the cost of airwaves be included to the present deductions.
WHAT THEY SAY
Vikram Tiwathia, chief regulator relations, TTSL
"Last year Chidambaram had announced as part of budgeting fee that a committee would be formed to look into licensing issues - but it has still not been finalised, resulting in a loss to the government. Thus, this year, we are looking at a rationalisation of tax and levies, uniform license fee of one per cent of the AGR. We are also hoping for a re-look at direct tax, tax holidays and section 81 (A), a re-look at licenses and indirect taxes. As far as infrastructure products are concerned, we are hoping for a boost in telecom infrastructure and telecom should also be included as part of infrastructure, so that all tax holidays applicable to infrastructure are applicable to telecom. Also, bank guarantees should not be required for telecom, and instead we should be included under the corporate guarantee scheme instead. Also, there should be a reduction in customs duty and CVD for mobile handsets and accessories. Basically, there should be an overall simplification of the tax regime.”
Satyen Gupta, chief regulatory advisor, BT Global Services
"We are hoping for a tax exemption for STPI, and an expansion in the limit for the same. Double taxation incidents wshould also be removed. Further, telecom bandwith re-selling and rate of USO contribution should come down from five per cent to three per cent. Further for consumers, broadband taxation should be removed from the total taxable income, which has an indirect benefit for operators as more bandwith will be used. Further, service tax on interconnect charges should be removed."
A K Dinkar, GM-Operations, MTNL
"We are looking at a reduction in import duty. Since the government is pro-telecom, they should do all they can to help operators. We are also looking at a gross reduction in spectrum licensing fees."
Ramesh A Vaswani, Executive Vice Chairman, Intex Technologies
"Desktop penetration amongst the masses has still not gained momentum. The growth rate is declining. GDP growth is very directly linked to IT literacy and infrastructure, amongst various other parameters. It is time for the government to come out with a specific policy measure in this direction. The government is already thinking of adopting cloud computing technology for delivering e-governance services. It should also allocate funds for a scheme to enable homes and schools in villages to have the benefit of a PC. The digital divide issue has to be addressed more aggressively on the lines of Right to Education Act."
"Under the umbrella of convergence, we have seen that mobile phones satisfy communication & information needs of masses and could play a major role in also bringing them into the banking system. Policy initiatives and fiscal incentives to promote local manufacturing of mobile phone components/accessories and complete mobile phones should be addressed. In this sector we have the potential to become a leading global player, aided by a huge domestic demand."
Rajiv Bhalla, Country Head – Sales & Marketing, NEC India
“We foresee a progressive budget that assures healthy growth of the economy and greater consideration to the use of technology for the betterment of the society as a whole.
The Budget should pave the way for investment-led growth and stimulate demand through fiscal measures. In the education sector, for instance, we are glad to see that the Government is giving the rightful importance to the basic foundation of education through programmes such as the Sarva Shiksha Abhiyan (SSA). Also, budgetary allocation towards technology that enables innovation in imparting knowledge and improving the quality of education in the country should be considered.
Similarly, the tourism industry is witnessing recalibrated growth. According to Crisil, In FY09, the market size of the hotel industry was Rs 17,900 crore. At present, 5.5 million tourists visit India and this number is projected to reach 10 million by 2010.It's important that we note that with the growth of a particular industry the infrastructure that supports it should also be strengthened. In this case to ensure growth of tourism, the hospitality sector needs to be strengthened. The Government's policies and tax structures must be attractive enough to encourage investments in the hotel sector. This in turn will empower hoteliers to look at adopting technology to enhance productivity, ensure customer satisfaction and reduce operational cost.
The IT industry undoubtedly is one of the most significant sectors critical to India's emergence as the next economic superpower. One also looks forward to budgetary allocations towards some Government projects in the space of national security & identity. With national safety gaining predominance in the agenda of the UPA government, we foresee greater allocation in the budget for smarter and more intelligent means of imparting security through some innovative biometric solutions and innovative ID projects.
Association of Unified Telecom Service Providers of India
“Broadband services can reach the urban and rural consumers only if services are offered at affordable rates. While announcing the broadband policy, the Minister of Communication had stated that the government would work out a package in consultation with the Ministry of Finance for reduction in fiscal levies, which would in turn result in increased costs to the end consumer.”
berym@cybermedia.co.in
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