India could be looking at replacing multiple charges imposed on telecom companies with a single levy but any recast will have to be revenue neutral, the finance ministry has said, without giveaways that would reduce collections.
The debt-laden telecom companies had been hoping for some relief through a simplification in the charges. The finance ministry and the Department of Telecommunications (DoT) are examining levies such as the spectrum usage charge(SUC), licence fees, Universal Service Obligation Fund (USOF) levied on telecom companies. They want to see if these can be replaced with a unified levy.
“There is a case for having a fresh look… not any giveaways but streamlining it and making it simpler,” economic affairs secretary Subhash Chandra Garg told ET. “DoT is looking at it. We have also asked them (DoT) as it is our non-tax revenue, to examine it to see it’s simple and efficient but revenue neutral.”
There is a legacy of imposing different charges for various things in the sector, he said, adding that it ultimately boiled down to subscribers paying for this in various forms, he said, explaining the rationale for reviewing the levies.
“There is no bailout or anything, but just to make it simple and efficient… and keep it revenue neutral. To use a different example, indirect taxation system was complicated, GST has simplified it,” Garg said, drawing a parallel with the goods and services tax that replaced multiple indirect taxes and cesses with one levy. Telecom companies pay licence fees, SUC into the USO Fund as a percentage of their revenue among various levies to the government.
The government has budgeted Rs 48,661 crore from other communications services in FY19, up from Rs 30,736 crore in FY18. This mostly includes licence fees from telecom operators and receipts on account of spectrum usage charges.
The companies say government levies account for over a third of revenue and want them lowered, as recommended by the telecom regulator, since they already pay market price for spectrum. Hence, there is no longer a case for revenue share, they argue.
Under the National Digital Communications Policy, 2018, DoT said it plans to optimally price spectrum, review licence fees and SUC as part of its approach that spectrum is a key natural resource used for public benefit. But that idea seems to have been rejected by the finance ministry, given the need for revenue to meet social spending.