Telcos to govt: Keep coupon sellers out of GST net

Business Standard By Kiran Rathee November 11, 2016. 01:30 IST

Cellular Operators Association of India (COAI) on Thursday said government should keep goods and services tax (GST) rate on telecom service at 12 per cent and exempt recharge coupon sellers from the tax ambit.

COAI, which represents telecom operators including Bharti Airtel, Vodafone, Idea Cellular, and Reliance Jio, said determining different tax rate slabs under GST reform is a crucial step.

"The sector is hopeful that being an essential service, it shall be placed in the merit-rate slab," Rajan S Mathews, director-general, COAI, said.

"On estimated basis at 18 per cent (GST rate), which is on the higher side, the tax revenue shall not exceed Rs 2,000 crore on yearly basis across the country from recharge sellers. Thus, levy of GST on maximum retail price, payable by telecom operators, is a logical step as it ensures full tax revenue for the central as well as state governments," Mathews said.

"The GST should be paid by telecom operators on MRP on which the services are sold and not on the recharge coupon seller who get very low margin on each sale. Tax compliance will make it tough for them to do business," Mathews added.

There are three million distributors and retailers engaged in the sale of recharge coupons. COAI said the four-tier structure announced by the GST council was one of the biggest indirect tax reforms in India.

However, it said the telecom sector was unique and regulated on the basis of 22 circles, of which 12 spread across more than one state.

"The telecom sector is committed to ensuring that GST is a success and has urged government to consider that restrictions based on state geographical boundaries are not imposed for tax-compliance purposes, since telecom services are supplied seamlessly across the country and it is impossible for the sector to track, value, and comply with inter-state transactions in multi-state circles, whereas these are revenue-neutral, too," Mathews said.

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