Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: VAT Audit :: form 3cd :: articles on VAT and GST in India :: due date for vat payment :: TDS :: list of goods taxed at 4% :: TAX RATES - GOODS TAXABLE @ 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARDS :: Central Excise rule to resale the machines to a new company :: VAT RATES :: ACCOUNTING STANDARD :: cpt :: empanelment :: ARTICLES ON INPUT TAX CREDIT IN VAT
 
 
Budget Extravaganza »
 Government should reinstate wealth tax in Budget 2017
 With demonetisation inducing tax compliance will PM Modi cut tax rates in Budget 2017?
 State plan budget utilisation in Odisha
 Maharashtra wants budget advanced to February
 Coastal economic zones may get 10-year tax exemption in next Budget
 Why advancing the Union Budget date may not make much difference
 Govt keen 2017-18 budget should not clash with polls: Arun Jaitley
 Finance Ministry seeks industry suggestions on taxation for Budget
 Budget should focus on fiscal firm up
 Finance ministry keen to present Budget on February 2 or earlier
 Poor railway performance may mar merged Budget

Budget '09 to accelerate it's growth
July, 06th 2009

The fast track growth of the Indian telecom industry has made it a key contributor to India's progress. India is making a big mark as a growing economic power and has at present, one of the fastest growing teledensity in the world. The dynamism of the sector though, is far from over.

The Government's policy announcements for 3G and Broadband Wireless Access (BWA) licenses focus on deployment of broadband, phased implementation of Mobile Number Portability (MNP) and the likely introduction of Mobile Virtual Network Operators (MVNO) promise to further stir things up.

However, with low ARPU (Average Revenue Per User) and tariffs, reduction in levies is required to sustain this growth. The telecom sector is plagued by multifarious taxes and levies like license fee, spectrum charges, service tax, entry tax, octroi, stamp duty, apart from corporate income tax, and rationalizing them has become essential in order to give impetus to the expansion of the telecommunication network in the country.

The industry expectations from this budget include:

Extension of tax holiday under section 80IA of the Income tax Act, 1961 (Act) - Given the long gestation period and huge capital costs (including upfront spectrum fee) involved in establishing 3G and broadband networks, for effective roll out of tax holiday under section 80 IA should be extended to provision of 3G and broadband services considering them to be separate and distinct undertakings. Similarly, tax holiday should also be extended to tower companies to facilitate a faster roll out of passive infrastructure which is critical for network expansion by the telecom operators.

Retention of tax holiday by telecom undertaking that are transferred by amalgamations and de-mergers - The Finance Act 2007 brought in an amendment in Section 80IA of the Act by withdrawing tax holiday for undertakings that are transferred under a scheme of amalgamation/ de-merger. This has significantly affected genuine re-organization of telecom operations of the telecom operators and is also impacting consolidation in telecom sector. It is suggested that suitable provisions may be brought in to plug any perceived 'anti abuse' as against complete denial of benefit to an undertaking, which is transferred under a business reorganization.

Exemption on dividend income/interest/capital gain - Restoration of exemption of dividend income, interest on long term finance and long term capital gains arising to the investing companies/infrastructure capital funds for the investments in telecom service companies under section 10(23G) of the Act. This would enable telecom undertaking to raise long term funds at a more reasonable cost in the present high interest rate regime.

Clarification on tax deductibility of lump sum spectrum charge - No separate license is required by the existing operators for 3G services. To avoid any disputes as regards tax deductibility of this charge, it should be explicitly allowed to be amortized evenly over the license period under section 35ABB of the Act.

SAD should either be exempted or made creditable - The network equipment imported into India is generally liable to customs duty comprising in addition to Basic Customs Duty, Countervailing Duty in lieu of Excise, which is creditable and Special Additional Duty ('SAD'), which is a non-creditable duty for the telecom service provider. SAD should either be exempted or made creditable (against output service tax) for telecom service providers, as this will reduce the capital cost and would help in faster roll out of telecom network.

GST Implementation - The tax authorities (both VAT and service tax) in multiple instances have sought to recover both VAT and Service Tax on a single transaction. A unified tax i.e. GST should be implemented at the earliest to relieve the industry from the present tax complexity.

Availability of Cenvat Credit in case of business transfer - In a case of transfer of business, the long accepted position has been that the Cenvat credit already claimed is not required to be reversed, so long as there is no physical removal of goods. However, recently some courts have taken a position contrary to this settled legal position. A suitable amendment should be brought in the Cenvat Credit Rules stating clearly that in a case of transfer of business not involving removal of goods from the premises, there should not be any reversal of Cenvat credit.

Cenvat credit on telecom towers, shelters and other goods at tower /cell sites - The authorities have been disputing Cenvat Credit on telecom towers, pre-fabricated shelters and other goods which are installed at a tower/cell site. These goods are indisputably essential for providing telecom services and constitute a major portion of the total investment made by a telecom service provider.

Further, though these goods are capital in nature for the purpose of accounting, there are issues regarding classification as 'capital goods' or as 'inputs' for the purpose of Cenvat Credit. Denial of Credit on cell sites/telecom towers is devoid of the basic principles of Cenvat. The disputes being raised by the authorities are leading to protracted litigation and blockage of funds. Accordingly, necessary clarification should be issued to allow credit of such goods as 'capital goods' in line with the basic principle of credit.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Contact Us

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions