The government’s tax on the Indian telecom industry is the highest in the world at 58 per cent, so it is imperative to reduce it to invest in technology to generate operational profitability and improve service quality, said a senior official of Vodafone Idea, who is in debt.
Speaking at the ‘India Mobile Congress’ held here, Vodafone Idea Ltd CEO Akshaya Moondra said telecom services is a capital-intensive industrial sector and it is important for the government to cut taxes in the industry to generate more cash flow. of cash from the business and at the same time invest in improving the quality of the service.
In the Indian telecom industry, service providers have to pay 18 per cent GST, about 12 per cent license fee and a spectrum usage fee. A tax burden of 30 per cent on both together is obviously auspicious. However, if the cost of spectrum is converted into annual fees rather than a lump sum and calculated as a percentage of revenue, service providers must bear another 28 per cent of their revenue, Mundra calculated.
The total value of spectrum allocated by the government to date is close to Rs.6 lakh crore, which is paid in annual instalments of around 28 per cent in value terms.
Mundra also praised the government’s recent reform efforts and the ease of doing business in the sector. But he also expressed the opinion that it is unfortunate that the government has to pay 58 per cent of revenue in the form of taxes in a country where customers have to pay the lowest rates for telecom services.
Bharti Airtel and Reliance Jio announced their plans to launch 5G services across the country two days ago. However, Vodafone Idea has not yet made any announcement regarding the schedule of 5G services. Voda-Idea, which is struggling to pay its dues to the government, has offered the government an equity stake in the exchange, a proposal approved by the government last July.
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