Budget 2017 Wishlist: Expectations from the telecom sector

Industry size

Total mobile services market revenue in India is expected to touch $37 billion in 2017

Employment figure

About 4 million of direct and indirectemployment in India 

Mobile industry contribution to GDP

About 6.5% to India’s GDP in 2015

 

---

Key issues or areas of concern for each sector

On sale of recharge coupons/ pre-paid starter packs, the revenue on talk-time need to be deferred for tax purposes over the period of usage

IRU rights acquired, being in the nature of commercial rights, fall within the definition of “intangibles” and, therefore, should be eligible for depreciation for tax purposes. This aspect should be clarified without further delay to end related litigation

 

---

Industry asks

Clarification on treatment of distributor margins discount given by telecom operators and TDS rate on it to be minimised

Under the proposed GST regime, telcos will have significantly higher compliance costs due to multiple-state registrations. This additional burden on the sector should be minimised

---

PwC point of view

Arpita Pal Agrawal, Partner and leader (telecom), PwC

1. Under the proposed GST regime, the operators would be required to obtain registration in each state of operation, adding to the complexities like multiple assessments. We recommend that the scheme of centralised registration and assessment be continued for telecom operators under the GST regime
2. We recommend that USF funds be utilised to encourage digital adoption among both urban poor and rural areas for both data connectivity and handsets

Read full transcript of webchat with Arpita Pal Agrawal

Rajan S Mathews, Director general, COAI
“The telecom industry has always been pro-development and has favoured a streamlined taxation policy with no unwarranted tax litigation. In order to ensure a uniform tax practice among taxpayers and eliminate unwarranted litigation, it is important for the government to clarify that section 35ABA of the Income Tax Act, which is applicable from FY17, regulates spectrum allocated after April 1, 2016. The spectrum allocated prior to April 1, 2016, shall continue to be governed by section 32 of the Act”

Also read: Telcos expect lower compliance cost in Budget 2017: Arpita Agrawal of PwC