The Cellular operators have approached the government for reduction in the 18 percent GST rates. Their industry body Cellular Operators Association of India (COAI) has said that reduction in GST rate is important as the industry’s financial condition is not good. In a letter sent to the Revenue Secretary COAI has said that GST rate for the telecom industry, which is already suffering from a poor financial condition, be reduced so that burden from the current level can be kept in check.
The letter came before the GST council meeting on June 11, when centre and states will discuss demands from various industries to lower proposed tax.
Previously, Finance Ministry had said that the rates will only be reviewed where the proposed tax is much higher than the current level.
The letter from COAI Director says that the benefits on account of availability of credit of existing duties and taxes are not as considered by the finance ministry.
The industry association said that the perception that three percent hike in GST rate will be compensated through reduction of cascading tax costs is far from reality.
The apex industry body said that the increase in GST rates will arise on the entire revenue while benefits of input tax will accrue on procurement of capital equipment that will lead to minimal benefits.
COAI, which comprise of Bharti Airtel, Vodafone, Idea Cellular and Reliance Jio among the others, said that a number of key inputs like diesel and electricity are still outside the GST for which no credit is available. So it is clear that this sector will fill the cascading effects of taxes even after the implementation of GST.
As per GST, the cellular services will be charged at 18% which is 3% higher than the current rate.