AUSPI seeks single taxation regime

Single tax system will make industry investor and consumer friendly.

The Association of United Telecom Service Providers of India (AUSPI) has sought the introduction of a single taxation regime, stating that the present taxation structure is complex and needs to be made simpler.

In its pre-budget proposals, the association has also said that a single tax system would help in making the industry both investor and consumer friendly.

AUSPI has also quoted finance minister P Chidambaram's inaugural address at the 77th FICCI annual general meeting of December 27, 2004, where in the minister said that he would address the complex taxation structure of the telecom sector.

A uniformity in taxes is a long standing demand of the telecommunications sector, with Cellular Operators Association of India (COAI) and other private players also voicing a same kind of request in the past.

The body has also sought a reduction in revenue share license fee, stating that in addition to the licence fee of 6 per cent to 10 per cent and spectrum fee of 2-6 per cent (depending on the circles), the service providers also pay a service tax of 10 per cent.

Currently, telecom access service providers pay a high percentage as license fee through a revenue sharing model. This revenue share ranges between 6-10 per cent of adjusted gross revenue (AGR) per annum depending on the category of licensed circle service area.

The present annual license fee on a percentage basis of revenue share is 10 per cent for metro and 'A' circle, 8 per cent for 'B' and 6 per cent for 'C' circles.AUSPI has also quoted an eariler Telecom Regulatory Authority of India (TRAI) statement, which mentioned that "telecom services should not be treated as a source of revenue for the government. Imposing lower license fee on the service providers would encourage higher growth, further tariff reduction and increased service provider revenues. With increased growth, it would be a win-win situation for the industry and the government".

The definition of adjusted gross revenues (AGR) is also a posing a problem for the telecom operators, who pay an annual license fee in the form of revenue share to the government.

At present, AGR includes all revenues accruing to the licensee on account of goods supplied, services provided, leasing of infrastructure, use of its resources by others, application fee, installation charges, and sale proceeds of instruments among others.

The association has sought interest received, dividends and miscellaneous non-telecom income from gross revenue because of the following considerations, avoiding of double payments of revenue share and sale proceeds among others to be excluded while computing AGRs.