Exempt us from MAT: Cell firms

The Cellular Operators Association of India (COAI) has sought exemption from Minimum Alternate Tax (MAT) and has also called for the reduction in handset duty to zero per cent and rationalisation of sales tax to 4 per cent.

Proposing the exemption from MAT during the 80lA period, COAI has said that this "would optimise the tax benefits and improve profitability, which in turn would translate into lower cost of service to consumers thereby facilitating growth".

With regard to handsets, it has asked the government to reduce the duty to zero per cent and sales tax to be rationalised to 4 per cent.

In addition to eliminating the flourishing grey market which deprives the government of huge revenues, this would also contribute to a huge rise in cellular subscribers as the entry barrier would fall and stimulate growth resulting in higher license fee, service tax and interconnect revenues to the government, said CAOI.

On Customs duty, the association has proposed that the current 28-34 per cent duty on telecom infrastructure be brought down to zero per cent.

Citing the government's vision of providing 250 million phones, 18 million internet connections and 10 million broadband connections by the year 2007, it has observed that the exemption would "help facilitate faster rollout of nationwide infrastructure required to meet the telecom targets".

With regard to hardware, the COAI has requested that all telecom equipment and installation material should attract the same duty as against the current scenario where spares, expansion and up gradation equipment attract 33.4 per cent and new equipment only 16 per cent.

In the budget, the COAI has also sought the extension of period from 15 to 20 years during which Section 801A benefits and the provision of 100 per cent exemption for 10 years in line with other infrastructure sectors.

Other demands include the exclusion of cell phones from the one-by-six criteria, exemption of registration of channel partners for service tax and income tax benefits regarding mergers and acquisitions.