Telcos seek tax credit refund, reduction in levies ahead of Budget 2023

The telecom industry plans to negotiate with the government on levies including license fees and charges to the Universal Service Obligation Fund (USOF) as part of their recommendations for the upcoming 2023-2024 budget, reported The Economic Times. The license fee currently is 8 per cent of adjusted gross revenue (AGR) where 5 per cent of it is contributed to USOF. The sector is also seeking a tax-credit refund of Rs 32,000 crore, according to ET.

The Cellular Operators Association of India (COAI) is vouching for provisions to enhance the telecom sector's financial viability. 

The recommendations will leave more funds with TSPs (telecom service providers) for expansion, increase liquidity, facilitate investments required to complete the digital India vision and 5G roll-outs and also keep tariffs at affordable levels, the COAI told Economic Times.

The telecom sector says that over a third of their earnings is currently paid to the government as levies. In the budget proposal, the industry also called for the removal of goods and service taxes on license fees, spectrum usage, and acquisition charges. 

The report added that the COAI plans to seek clarification on tax credits on telecom critical equipment installed on towers. 

The proposals ahead of the budget are being drafted in the backdrop of a series of reforms the government announced in September, including a four-year moratorium on statutory due payments by the telecom industry, 100 per cent foreign direct investments in the sector under the automatic route, removal of penalty and interest on penalties, expansion of spectrum tenure to 30 years instead of the existing 20 years, and removal of additional usage charge for spectrum sharing, said ET's report.