COAI Submits Recommendations for Union Budget 2024-25, Advocating Financial Well-being of Telecom Industry

The Cellular Operators Association of India (COAI), the apex industry body representing the digital communications ecosystem in the country, has submitted recommendations for the Union Budget 2024-25 to the Ministry of Finance, Government of India.Mobile data user in Gulf smartphone market

Image by marymarkevich on FreepikThe primary focus of these recommendations is on enhancing the financial well-being of the telecom industry.

The key requests made by the telecom industry for the Union Budget 2024-2025 include:

Regulatory Levies: COAI proposes the abolition of the USOF levy, or alternatively, a suspension of the USO contribution (5 percent of AGR) until the existing USO corpus (INR 77,000 Crs) is exhausted. The industry body also calls for a reduction in License Fee from 3 percent to 1 percent to cover only administrative costs by the Department of Telecommunications (DoT) and the government.

Direct Taxes: COAI urges the introduction of a special regime for telecom operators under Section 72 of the Income Tax Act, 1961, allowing business losses to be carried forward and set off for sixteen assessment years, up from the existing eight years. The industry argues that this extension is crucial for the recovery phase, considering the challenges faced by the telecom sector.

Service Taxes: COAI seeks an exemption from Service Tax on the “assignment of the right to use natural resources” granted by the Central Government/State Government and Development Authorities. Additionally, the industry requests an exemption from Service Tax on the additional liability of AGR (Adjusted Gross Revenue) following the Supreme Court judgment.

Customs Duty: COAI emphasizes the need for exemptions on Customs duty for certain telecom equipment to alleviate the financial burden on telecom companies. The industry body proposes reducing Customs duty to zero, gradually increasing it based on the creation of an ecosystem for manufacturing telecom gear in India.

Clarification(s) on Cable Repair/Installation Operations: COAI calls for clarification regarding activities related to cable repair/installation operations in the Exclusive Economic Zone (EEZ). The industry emphasizes the importance of extending the customs duty exemption granted to vessels engaged in laying submarine cables beyond March 31, 2024.

GST: COAI advocates for an exemption from GST under the Reverse Charge Mechanism (RCM) on payments made to the Department of Telecommunication (DoT) for License Fees, Spectrum Usage Charges, and Spectrum Acquisition Fee. The industry seeks relief from the financial burden caused by the accumulation of Input Tax Credit (ITC) within telecom companies.

S.P. Kochhar, Director General of COAI, expressed optimism about the government’s recent forward-looking reforms but emphasized the need to address financial constraints hindering the telecom sector’s expansion. Kochhar urged the government to allocate resources for 5G rollout, network expansion, and fiberization in the upcoming budget to unlock the sector’s full potential.

The industry remains hopeful that the recommendations presented by COAI will be seriously considered by the GST Council, recognizing their significance for the ease of doing business and restoring the financial health of the telecom sector.