Exempt levy of customs duty on telecom equipment to boost 5G roll out: COAI

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The top telecom industry body on Wednesday urged the government to exempt the levy of basic customs duty (BCD) charges in the upcoming Union Budget, which will further help in the deployment and smooth roll-out of 5G in India.

Higher customs duty on telecom equipment is disrupting the cost-effectiveness of the telecom companies as around 85 percent of the telecom equipment in the country is imported.

“BCD of 20 percent is levied on import of most of the telecom equipment like optical transport equipment/networks, IP radios, MIMO/LTE products, soft switches, VoIPs, PTN, MPLS -TP, etc. which is disrupting the cost-effectiveness of the telcos,” said the Cellular Operators Association of India (COAI), the apex body that represents the telecom sector.

The industry body suggested exempting the levy of BCD charges as it will be beneficial for importing essential equipment to boost the 5G rollout.

“Telcos are constantly upgrading infrastructure to keep up with the new-age technologies. However, the required facility to manufacture the equipment has not yet been set up in India. Therefore, telcos are dependent on imports,” COAI Director General, Lt. Gen. Dr. S.P. Kochhar (retd) said.

Considering the financial health of the industry and the huge investments,”relaxation in import duties will go a long way in helping us realize our dream of an aAtmanirbhar Bharat”, he added.

The apex telecom made several recommendations for the Union Budget 2023-24 to the Ministry of Finance.

The COAI requested that the Universal Service Obligation (USO) Fund contribution of 5 percent of adjusted Gross Revenue (AGR) may be suspended till the existing USO corpus is exhausted and license fee is brought down from 3 percent to 1 percent at the earliest to cover only administrative costs by the DoT/government.

For facilitating ease of doing business, a centralized registration process is recommended for the industries having spread in all 36 States/UTs.

“As an alternative, a centralised jurisdiction may be formed to govern the day-to-day affairs of the taxpayers,” said the body.

The COAI also requested the government to facilitate centralized assessment, and audit procedures for large taxpayer units with turnover of over Rs 500 crore and presence in over 12 states/UTs.

This would limit this facility to less than 1 percent of all corporates and ensure ease of doing business with no corresponding loss of revenue to the government, it said.

Kochhar said that given the huge burden of taxes and regulatory levies on telecom operators, and the critical nature of the service to drive ‘Digital India’, “a special benefit may be provided to telecom operators by way of exemption of GST on regulatory payments of LF, SUC, and spectrum assigned under auction”.

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