Will GST benefit the telecom sector? |
| The Financial Express By Bipin Sapra September 9, 2016 7:24 AM |
| Due to variance in regulatory requirements and GST provisions, undertaking compliance and reconciliation would be a massive and complex task for telcos |
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| Touted as India's most transformative tax reform in decades, the goods and services Tax (GST) has the potential to add as many as 2 percentage points to the GDP, while also improving the ease of doing business. When implemented, GST is expected to usher in a harmonised national market of goods and services, and lead to a simplified, assessee-friendly tax administration system. However, there are sector-specific issues arising from aspects of the model GST law that are required to be addressed by the government before the introduction of the final law. |
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| Telecom is one of the most basic and critical infrastructure services and has a massive outreach to more than a billion subscribers across geographical boundaries. Telecom faces several issues under the current indirect tax regime and, therefore, the sector has high hopes from the proposed GST regime. However, the model GST law does not appear to bring an end to the issues being faced by the telecom sector. |
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| Exclusion of petroleum products: Another major impact on the telecom sector is on account of deferment of applicability of GST on petroleum products. The telecom sector has to maintain round the clock uninterrupted supply of services, which necessitates the use of power generators. Given that the applicability of GST on petroleum products has been deferred, the same would continue to attract central excise duties and states sale taxes. This would result in massive cascading impact on the telecom sector. |
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