Telecom Operators Seek Budget Relief with Licence Fee Cuts and GST Waivers
Telecom operators have submitted Budget proposals to the Finance Ministry seeking licence fee reduction from 3% to 0.5-1% of AGR, pause in Digital Bharat Nidhi contributions at 5% of AGR, and GST waivers on regulatory payments. The industry also wants input tax credit usage for GST dues and spectrum pricing recalibration, citing financial strain from statutory levies limiting network investments.
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Telecom operators have approached the Union Finance Ministry with a detailed list of relief measures for the upcoming Union Budget, citing mounting financial pressures from statutory levies that continue to strain sector balance sheets and limit network investment capabilities.
Key Financial Relief Demands
The telecom industry's representation, submitted on January 13, focuses on several critical areas where operators seek government intervention. The companies have highlighted how current regulatory costs are hampering their ability to invest in network infrastructure and maintain competitive operations.
| Relief Measure | Current Rate | Proposed Change |
|---|---|---|
| Licence Fees | 3% of AGR | Reduce to 0.5-1% of AGR |
| Digital Bharat Nidhi | 5% of AGR | Pause contributions |
| GST on Regulatory Payments | Applicable | Complete waiver |
GST and Tax Credit Proposals
Beyond the licence fee reduction, telecom operators have sought comprehensive relief from indirect taxes. The industry wants a complete waiver of goods and services tax on regulatory payments, which currently includes licence fees, spectrum usage charges, and spectrum payments. This move would significantly reduce the operational cost burden on service providers.
The operators have also requested permission to use input tax credit to discharge GST dues payable on licence fees and spectrum usage charges. This mechanism would provide additional financial flexibility and improve cash flow management for telecom companies.
Spectrum Pricing and Sharing Reforms
The telcos have additionally sought recalibration of spectrum pricing and assignment models as part of their Budget demands. This request aligns with recent developments in spectrum sharing policies, where the Department of Telecommunications has proposed enhanced flexibility for operators.
Recent Spectrum Sharing Developments
Last year, the Department of Telecommunications introduced one-way spectrum sharing among telecom operators, enabling service providers to monetise and optimally deploy unused radio waves. The new framework allows operators holding frequencies in different bands to share them with other operators having spectrum in separate bands within the same category and telecom circle.
Industry experts indicate this development will particularly benefit operators like Vodafone Idea and BSNL in unlocking unused spectrum assets, while helping Reliance Jio and Bharti Airtel optimise their 5G services across circles. The DoT has proposed removing limitations of sharing spectrum within the same band to category-level sharing, providing operators with enhanced options for deploying unused spectrum for high-bandwidth services.
Industry Impact and Expectations
The comprehensive nature of these demands reflects the telecom sector's ongoing financial challenges and the need for regulatory support to maintain network quality and expansion. The operators argue that reducing statutory levies would free up capital for network investments, ultimately benefiting consumers through improved services and coverage.
The timing of this representation, ahead of the Union Budget, indicates the industry's expectation that the government will consider these measures as part of broader economic policy initiatives. The success of these proposals could significantly impact the sector's financial health and investment capacity in the coming fiscal year.
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