Business Daily from THE HINDU group of publications
Friday, Dec 08, 2006
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Business Daily from THE HINDU group of publications Friday, Dec 08, 2006 ePaper |
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Info-Tech
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Telecommunications Industry & Economy - Budget DoT seeks duty cuts for telecom gear, software Thomas K. Thomas
The industry demand for removing service tax on incoming international mobile roaming users has not been included in DoT proposals.
New Delhi , Dec. 7 The Department of Telecom has recommended a number of initiatives including a reduction in excise duty for all telecom equipment from 16 per cent toeight per cent as part of its pre-Budget proposals submitted to the Finance Minister. It has also backed the industry demand to remove the eight per cent counter veiling duty (CVD) on software used in telecom equipment. Currently, an eight per cent CVD is imposed on software available off the shelf while customised software is exempted. Telecom software is usually not available off the shelf but is developed specifically for an operator by the network integrator.
Wireless data card
The DoT has also pushed for an excise duty cut on wireless data card and modems, which will make broadband services cheaper. However, the industry demand for removing the service tax on incoming international mobile roaming users has not been included in the DoT proposals. Another important proposal is to reduce the licence fee revenue share for telecom operators to a uniform six per cent. Currently, operators pay between six per cent and 10 per cent of their annual revenues as licence fee. "The proposals are aimed at making the cost of offering telecom services lower which in turn should result in cheaper tariffs for the consumers," said a DoT source.
More proposals
The domestic telecom industry is one of the heavily taxed sectors in the world. According to industry estimates, the taxes and levies currently add up to 30 per cent of the operator's income. The DoT has also sought an extension of the tax holiday under Section 80IA from 15 years to 20 years. The industry had also sought exemption of the interconnect usage charges (IUC) from service tax net. IUC is paid by one operator to another for carrying the telephone calls on its network. Inputs from DoT will be considered in the preparations of the Union Budget 2007-08.
Related Stories: More Stories on : Telecommunications | Budget | Regulatory Bodies & Rulings | Software | Excise and Customs
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