Presentation to Department of Telecommunications Pre-Budget Recommendations. Association of Unified Telecom Service Providers of India 29 December, 2005 : New Delhi. Telecommunication. Growth potential in the telecom sector is enormous. Only 30% population presently covered.
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Association of Unified Telecom Service Providers of India
29 December, 2005 : New Delhi
The world is moving towards convergence mode because of the tremendous potential of the ICT and the impact it has on every other sector. Planned development and use of ICT hold the key to faster growth and give the country a competitive edge in the globalised economy.
[Source: Mid term appraisal of 10th plan, Planning Commission]
Given this growth target, India has the potential to surpass China’s mobile growth in terms of subscriber. This however, needs suitable strategies and policies. [source : Strategy Paper on Telecom, MoF]
The importance of telecommunications to the economic growth of the country has been highlighted by various studies as they consider that a strong link exists between telecom penetration and GDP growth and productivity of a country. Use of telephones and other information and communication technologies can result in substantial improvement in the level of household and business incomes. This fact has also been emphasized by the government as can be seen from its goals in the Common Minimum Programme (CMP), key among which is the promotion of e-governance on a massive scale, which will enable the common man to access government services in an efficient, convenient and cost effective manner. [source : Strategy Paper on Telecom, MoF]
Why Revenue Share License Fee
Rs in Crores
* Rate of service tax taken as 5% upto 13.5.2003, 8% upto 31.3.2005 and 10% thereafter.
In line with recent government decision of reduction in revenue share license fee for long distance services, there should be uniform reduction in license fee to 6% including USO levy for UASLs.
Source : Strategy Paper, MoF
FM promised in his Inaugural Address at the 77th FICCI Annual General Meeting on 27th December, 2004 that he will address the complex taxation structure presently existing in the Indian telecom sector and come out with investor-friendly, industry-friendly simple tax structure in this budget of 2006-07. Relevant extract of his speech is reproduced below:
“The second aspects which your President touched upon are four sectors which, while he may have referred to them in one context, are extremely important to me in another context. These are – textiles, petroleum, sugar and telecom. Now, what is common among these four? In my humble view, what is common among these four sectors is a convoluted tax structure that applies to these sectors. From time to time, all of us have contributed to the convoluted tax structure. We have to unravel this. We have to make this simple, investment friendly and industry-friendly. Last year, you will recall, I made a beginning with one part of the textile sector, namely natural fibres. And I acknowledge readily that it is an unfinished exercise, that there is another part of the textile sector, namely man-made fibres, which requires attention. But to textile we must add petroleum, sugar and telecom as sectors which have a very complex taxation structure. I promise that we will address this complex taxation structure and come out with an investor-friendly, industry-friendly simple tax structure in the next budget.”
Excise duty on locally manufactured equipment be at the lowest level of 8%.
To achieve the targeted growth of broadband AUSPI suggests the following :
SECTION 80IA OF THE INCOME TAX ACT
BENEFITS U/S 80IA(4)(ii)
CONTINUANCE OF BENEFIT U/S 80-IA IN CASE SLUMP SALE
TDS ON REIMBURSEMENTS
TDS ON PAYMENTS COVERED BY 10 (23)G
SECTION 10 (23G) OF THE INCOME TAX ACT, 1961
SECTION 115JB OF INCOME TAX ACT
RESTORATION BENEFIT U/S 80HHE
CLARIFICATION REGARDING TAX TREATMENT IN CASE OF AMALGAMATION & DEMERGER
INTERNATIONAL TAXATION ISSUES
CLARIFICATION WITH RESPECT TO INTERNATIONAL ROAMING AGREEMENT