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General News: Prepaid mobile users to get lower talk value under GST regime: ICRA - Printable Version

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Prepaid mobile users to get lower talk value under GST regime: ICRA - nairrk - 06-02-2017

NEW DELHI: Goods and Services Tax (GST) will have a marginally negative impact on telecom sector and would shrink talk value for prepaid mobile subscribers, according to a credit reating agency ICRA.

The telecom services will become costlier with the increase in tax rate from 15% to 18% and will lead to lesser talktime on fixed denomination packs for prepaid users which account for almost 95% of total user base in India, the Gurgaon-based firm Thursday said.

For the telecom tower industry, the tax incidence will also increase to 18% from 15%, according to its finding which added that the reconciliation of roaming revenues will also be a challenge for the industry.

The report further suggested that for the telecom industry compliance and data management requirement will increase significantly since the industry’s operations are divided across 22 telecom circles.

For domestic mobile handsets, the levy of 12% GST where earlier the tax rate in the majority of the states was 6% will impact various local manufacturing units.

On the other hand, the Ministry of Electronics and Information Technology has assured the industry of providing the duty differential in some way but till the time such benefits are made available, the local manufacturing of handsets will be under pressure.

For imported mobile handsets, the pre-GST tax rate was 18%-27% which will now be 12%.

Source: