@ksh@T 20 Report post Posted February 5, 2006 NEW DELHI: The finance ministry is considering a proposal to provide tax breaks to telecom service operators in line with other core infrastructure sectors like power and roads. Telecom service operators may now enjoy a 10 year tax holiday after the budget as opposed to the existing five year tax holiday.This sop may come as a major break for telecom service providers who have maintained that this would help them to increase their investments and expand operations. The telecom service industry has been demanding a parity with other sectors. The industry says that if they are given 100% tax exemption for 10 successive years, then they will have enough disposable surplus for reinvestment in their business and expansion of their network. Thus, the service providers will be able to provide services in remote areas at affordable prices. Under section 80-IA of Income Tax Act, companies in the infrastructure sectors like power, roads and ports get a 100% tax exemption for a period of 10 years in succession. These 10 years can be opted out from the block of first 20 years. However, in the case of telecom services, the operators are allowed 100% exemption on taxable profits for first five years. Thereafter, the companies get a 30% tax exemption for a block of five years out of 15 year period. When telecom was brought under section 80-IA, then the finance ministry argued that the total investment required in the telecom sector is much less than that in other core infrastructure sectors. Moreover, return on investment is much faster in telecom service sector. Therefore, they were given tax holiday only for five years. The industry says that unlike other sectors, they have to continuously invest in their projects for upgradation and expansion of networks. Sources said that the FM has informed the department of telecommunications (DoT) that the ministry is considering this recommendation seriously. Source: The Economic Times w3elll if this happens this step can boost the telecom growth to a very ZIIPPPYYY figures Share this post Link to post Share on other sites
