Cell tower operators seeks abolition of property tax

The industry body, Taipa said no competence to levy and collect such tax under Indian Telegraph Act

Mobile tower companies have written to telecom regulator TRAI alleging that coercive action by local bodies for taxes, retrograde orders and no benefit under GST are the key impediments facing them to run business.

The mobile tower firms, under the umbrella organisation of Tower and Infrastructure Providers Association (Taipa) have sought abolition of property and other taxes imposed in states that are not in sync with central government rules.

"Some of the municipalities and states consider telecom towers only as a source of revenue instead of critical infrastructure essential for the common public. They calculate property taxes based upon the rentals, not linked to the standard and well established guidance/rateable value for the area," Taipa said in its submission to Telecom Regulatory Authority of India (TRAI).

The industry body said that property tax on mobile towers should be dismissed as the state and local authorities including corporations have no competence to levy and collect such tax under Indian Telegraph Act.

"The issue related to levy of arbitrary and exorbitant property tax on telecom towers at different rates or amounts by different local authorities including municipal corporations, municipalities and state governments coupled with coercive actions such as sealing of towers, disconnection of power supply, nuisance at sites, use of force and damage to telecom sites etc. Have again come to light in recent times," Taipa said.

It said that more than 250 tower sites have been sealed, removed or demolished by various municipal corporations in Maharashtra resulting in huge impact on telecom services on over 3 million consumers.

The industry body said that its members which include firms like Indus Towers, Bharti Infratel and American Towers, own 90 per cent of the telecom infrastructure in the country but still the government has not inlcuded them under Right of Way (RoW) Rules notified by the Department of Telecom last year.

The RoW rules protects telecom companies from high rates charged from them by various government agencies and removes impediments of permits by different authorities.

The industry body raised concerns over a government order asking mobile tower companies to either take a telecom licence or transfer ownership of some items like mobile antenna, feeder cable etc to telecom operators.

"Government should enable faster provision of cost effective common telecom infrastructure for the benefit of public at large and not revenue generation from licenses... which has cascading effects and eventually leads to additional cost to public at large," Taipa said.

It said that the government under GST has not allowed tax credit on the tax paid by telecom operators on bills generated by them.

"With CENVAT credit not available (under the plant & machinery) to tower infrastructure business, the cost of services will rise considerably and billing by IP-1 to TSPs (telecom service providers) will need to include the component of additional tax implication in its overall cost structure," Taipa said.