Calls for Lower Taxes on India's Telecoms Operators
A report from India's Finance Ministry is recommending that the myriad of taxes applied to telecoms operators should be streamlined to just two or three different levies. The paper does accept that in a country where the states also share the tax revenues and suggests a slow phasing out of the different taxes until a balance is finally reached. Meanwhile, existing levies and charges should be reduced, said the paper, entitled 'Strategy for India's Services Sector: Broad Contours'.
"Telecom services face multiple taxes and levies. The levies and duties in the Indian telecom sector are one of the highest in the world," claimed the report, authored by Dr H A C Prasad, senior adviser in the ministry.
The paper noted that total taxes on telecoms services in India reached as high as 26% of adjusted gross revenue - compared to 6.5% in Malaysia and just 0.5% in China. For the mobile sector, there is a 5% duty on imported handsets - which encourages a thriving gray market in smuggling along with the operators facing a 16% tax on infrastructure purchases which slows down the ability to expand their network coverage.
The Department of Telecommunications (DoT) has been asked by the Finance Minister to study the impact of taxes on telecoms operators and make recommendations as to how to flatten the current tax regime.
Posted to the site on 25th November 2007
