New Delhi: The industry as a whole and the Telecom sector, in particular, is hoping that the GST bill will be passed in the Parliament soon.
Telecom industry has also sought clarification from the government on the issue of levy of taxes on value added services.
The GST regime gives a major fillip to the efforts by the government to offer a simplified tax system and also improve ease of doing business in the country. However, the telecom segment will continue to face challenges given the broad framework of the GST.
There are certain doubts about VAS. Ringtones have been deemed as entertainment in particular states and taxed with ‘Entertainment Tax’. Since service tax is applicable on revenue generated, it leads to the situation when a service is taxed twice. The Telecom industry has asked government to clarify about the applicable tax on such services.
The government must come out openly about the taxes applicable to such services. It will help the smooth and seamless amalgamation of the industry to the GST. The sector growth will depend on upon pragmatic policy and a less stifling regulatory environment which will foster investment and productivity.
Another point of worry on taxes on VAS is infrastructure sharing and e-commerce transaction which could face the double tax dilemma. The government also must be clear on the supply rules for the industry especially on pre-paid services, enterprise to enterprise transaction, company to customer sales, and mobile wallet services.
GST is a very pragmatic and ambitious bid to alter the existing indirect tax regime and create a common market for goods and services in India. At present, there is a complex and boggling myriad of taxes like central excise, service tax, state VAT, surcharges, education and infrastructure cess, etc. The first framework for the GST was released by a Special Committee way back in 2009. However, the process was stonewalled by State Governments.
The GST seeks to establish a destination based consumption tax and will include Central GST and State GST. It will be levied on all taxable transactions of goods or services.
The GST bill has already been passed by the lower house. However, it is facing opposition in the Rajya Sabah where the NDA does not enjoy a majority. Hence the government is trying to build up a consensus and subsequently pass the bill in the upper house of the parliament. The GST will bring a paradigm shift in the tax structure of the country and act as a stimulant for the economy, especially in sectors like infrastructure, telecom, pharma and the Auto industry.