Isps Demand Tax Exemptions For Broadband

[abhay 0]

ISPs demand tax exemptions for broadband

Citing the country’s poor broadband penetration, Indian internet service providers (ISPs) have asked the government to exempt broadband services from levy of service tax for the next five years.

It has also made a pitch for a five-year income-tax holiday. “India, with a poor penetration (0.16%) of broadband, should not levy 12.24% service tax (including education cess),” the ISPs have told the government.

According to Telecom Regulatory Authority of India’s (Trai) figures, India currently has just under 2 million broadband connections. The country has also failed to meet the targets set by the Broadband Policy, which had envisaged 3 million high-speed internet connections by 2005.

The country is also unlikely to miss future target of 10 million broadband connections by 2007. The Internet Service Providers’ Association of India (ISPAI) has also sought a 100% depreciation for computers within the first year, and a similar depreciation on broadband customer premise equipment (CPE), including set-top boxes, modems, wireless Radios and routers within the first year.

“Also the amount incurred for buying computer or laptop by employee (government or private) should be exempted from the income-tax on production of valid bill.

Further, all corporations, whether public or private, should be allowed to give Rs 6,000 per annum allowance to employees for broadband services access at home,” they said, adding that this allowance should be removed from taxable income for the corporation. The same facility, ISPAI said, should be extended to self-employed professionals and individuals.

The association has also asked for tax holidays for organisations or even individuals who donate their PCs and other related equipment to institutions and schools, charitable organisations and local bodies while asking for a 100% exemption from Custom duty on goods imported by ISPs for providing broadband access.

“The government should also recommend to all states to waive sales tax on goods and services that are transacted through electronic mode (e-commerce) for the next five years. The state governments should follow these recommendations with legislation to ensure proper execution.

Similar legislation should also go from the Centre to the state governments for waiver of entertainment tax, currently about 30% in certain states, levied on broadband subscriptions and entertainment services, if they are provided through a broadband or internet platform,” ISPAI said.

http://economictimes.indiatimes.com/articleshow/764082.cms

i dont think service tax is the only major roadblock in broadband penetration !! i think one and only major problem is lastmile (wireline or wireless) although as u people know i always prefer wireless

Edited December 11, 2006 by abhay

[linuxguy 0]

ra5cals! They dont want to improve the broadband penetration! They just want to increase their profits by 12.24%!!!

[MVP 3]

ra5cals! They dont want to improve the broadband penetration! They just want to increase their profits by 12.24%!!!

They are asking to remove the 12.24% tax that you pay on your bill. It doesn't increase their profit by 12.24%, its the users who are going to save money if its implemented.

[linuxguy 0]

matthew, they haven't said that they are going to pass on the benefits to the customers.., have they?

[Puneet 0]

They haven't said that because there is no need to say so. Once the government grants the ISPs exemption from service tax, they will not be able to charge the same in bills. Its not that they can charge customers service tax and not transfer it to the government. Any exemption on a direct tax (service/sales/octroi) is directly passed on the customers. Manufacturers and service providers can only decide to pass or not to pass the benefit to customers if the exemption or rebate is for indirect tax or levies (excise duty/custom duty/license fees).