Telecom industry deserves lower tax rate under GST regime, according to Tower and Infrastructure Providers Association (TAIPA).

TAIPA represents telecom tower companies such as Bharti Infratel, American Tower, Indus Towers, Reliance Infrastructure and GTL Infrastructure.

TAIPA said non-availability of input tax credit (CENVAT credit) will impact cost of services and billing by IP-1 companies to telecom operators.

The recent announcement on GST rate of 18 percent tax levy for telecommunication services will impact the consumer. Non-availability of Input tax credit (CENVAT credit) (under the plant and Machinery) to tower infrastructure business will lead to huge impact on the cost of services and billing by IP-1 to TSPs, which will either be passed to consumers or it will further add on to the huge debt of TSPs due to the hypercompetitive market.

Telecom operators are going to make huge investment for in-building solutions, fibre and small cell deployment etc. to create a robust telecom infrastructure.

“The prime objective of the Government to introduce GST was to ensure that there is no cascading of taxes. The impact of such non-inclusion and higher tax rates will impact the financial health of the telecommunication industry,” said Tilak Raj Dua, director general, TAIPA.

More than 1.1 billion mobile phone subscribers are connected through 4,50,000 towers mounted with over 15 lakh BTSs. The telecom tower industry has invested more than 2 lakh 50 thousand crore. Mobile sector’s contribution to GDP will increase to 8.2 percent by 2020 from 6.5 percent.