Rationalise taxes for debt-laden telecom players: Study

Telecom operators are grappling with huge debt burden of Rs 3.80 lakh crore, reinforcing a case for rationalisation of taxes and other levies along with spectrum charges, a study has recommended.
The joint paper by Assocham and KPMG said the operators are grappling with a huge debt burden of Rs 3.80 lakh crore, "reinforcing a case for rationalisation of taxes and other levies along with spectrum charges".
An additional customs duty of 10 per cent will lead to an increase in cumulated duty to 29.44 per cent, it added.
"Even though consumers are having a last laugh with competitive offers from the major players, the service providers need to penetrate further into the fast expanding data market and create a volume that would make their cash flow running," Assocham Secretary General D S Rawat said.

Even as operators are under huge debt burden, the industry finds itself in a tariff war with entry of a major player.
Simplification and rationalisation of tax regime will provide required financial stability to Indian telecom industry, he added.

Presently, multiple charges and taxes are levied on the sector in addition to the charges paid by other industries like corporate tax, VAT, etc.
Spectrum Usage Charges (SUC) in India are comparatively higher than other economies, the study said.
It added that the telecom sector is expected to contribute 8.2 per cent or Rs 14 lakh crore to the GDP by 2020.

"We are confident that the government which has set a fast pace of policy and execution will support this endeavour," Assocham national council on telecommunications Chairman and Director (Regulatory, External Affairs and CSR) at Vodafone India, P Balaji, said.