Hello, Your Phone Bills Are Gonna Get Cheaper

[shan 0]

RNEW DELHI: Good news for yakkers. Your mobile and fixed line phone bills could see a further drop .

The government is looking at a proposal to lower the service tax rate on telephones following a recommendation from the Telecom Regulatory Authority of India (Trai). A 10% service tax is charged on phones now.

The regulator has, however, not backed the telecom industry's demand to scrap a plethora of charges such as licence fee, spectrum charges and instead, merge them into a single service tax levy.

The overall tax burden on mobile service providers is around 17% to 24%. Finance minister P Chidambaram has already indicated that the taxation structure in the telecom sector will be simplified in the coming Budget.

Telecom biggies including RIL chairman Mukesh Ambani and Bharti group chairman Sunil Mittal had made out a case for a single, lower levy to reduce the overall tax incidence and the cost of compliance in their pre-budget interaction with the finance minister. The single levy, according to them, could be in the form of service tax.

"We are of the view that the overall tax burden of the industry should be lowered. But all the levies cannot be clubbed into a service tax at this stage. Imposts including licence fees, access deficit charges, universal service obligation fund and service tax have to continue separately for sometime. As an interim measure, a lowering of the service tax levy to, say, 5% can be considered," Pradip Baijal, chairman, Trai told ET.

evenues from service tax form a part of the divisible pool of taxes that are shared with states. Currently, states get a 29.5% share of pooled central taxes based on the Eleventh Finance Commission's recommendations.

While the proceeds from licence fees and spectrum charges go to the Centre, the USO charges go to a dedicated fund to finance the spread of telecom in commercially unviable rural areas. None of these are shareable with the states.

Neither is ADC, which goes to BSNL and MTNL. It is a charge levied on telecom services firms to fund the state-owned telecom operators' loss-making investments made on social, rather than commercial, considerations. An ADC of Rs 2.50 per minute has been proposed to be levied on ISD calls and 30 paise per minute on STD calls, with effect from February 1.

Trai's recommendation to lower the service tax burden is significant in the context of Mr Chidambaram's promise to simplify the tax structure for the telecom sector. However, the revenue implications are being weighed as telecom accounts for almost a quarter of the budgeted service tax revenues of Rs 14,150 crore in the current fiscal.

The tax burden of 17% to 24% covers a 10% service tax plus sales tax levied by a few states, 5-10% licence fee and 2-6% spectrum charges. USO charges are included in the licence fee.

In contrast, the overall tax burden in China is around 3.5% including spectrum charges of 0.5%. The incidence is far lower in Sri Lanka and Pakistan compared to India

[AKS 0]

Wow! Great New. Thanks for the information

[rim-matrix 0]

hope something really happens

[rakesh5295 0]

If u read news papers i frequently come accross of v v high profits of bharti and orange etc. do have a reduction in prices does govt service tax lowering is necessary? i mean even otherwise the comapnys can lower the rates.