 "Telecom Tower")
Telecom tower companies will not get refunds on taxes paid by them on their inputs under the goods and services tax (GST) regime, which is slated to be rolled out from July 1. The refunds, called input tax credit, have been omitted in the final draft of the GST Bills.
The matter was discussed by the GST Council, which decided that input tax credit should not be available to telecom tower firms. It is learnt that a finance ministry official argued that anything attached to earth becomes immovable property and that no GST is paid, hence, no credit should be available.
But experts argue that these days towers are not immovable, as there are mobile towers as well.
“The government should revisit this position and provide credit to telecom tower. If credit is not available, then it will be passed on to consumers who will bear the burden,” said Pratik Jain, leader, Indirect Tax, PwC.
However, according to a telecom analyst, “Under normal circumstances, it (financial burden) is passed on to customers. But in today’s competitive scenario in the telecom industry, no company can do that.”
On Tuesday, Bharti Airtel off-loaded a 10.3 per cent stake in its tower infrastructure arm, Bharti Infratel, for Rs 6,193.9 crore to a consortium of global private equity firms KKR and Canada Pension Plan Investment Board (CPPIB). The move is expected to help reduce the telecom firm’s nearly Rs 1-lakh crore debt, besides strengthening its cash reserves to invest in infrastructure amid market consolidation.
According to telecom experts, the tower space would witness a churn following consolidation in the sector, including the announcement of Idea-Vodafone merger. Among the tower deals, in December, Reliance Communications sold a majority stake in its tower business to Brookfield for $1.6 billion, while NYSE-listed American Tower Corporation bought a 51 per cent stake in telecom tower firm Viom Networks for Rs 7,635 crore ($1.2 billion) in an all-cash deal in 2015.
