So here comes one of awaited reform in indirect taxation system, Yes, I am referring to GST (Goods and Service Tax)-Constitutional (122nd Amendment) Bill. It have the potential to add almost 2% in Current GDP. Majorly distributed in 3 parts :
1) CGST – Central GST
2) SGST – State GST
3) IGST – Inter GST
I am here to talk about the impact of GST in Telecom Sector and majorly on Telecom Operator. This sector, as we know, is broadly divided into three segments: Telecom Service providers, Infrastructure Providers and Lastly Equipment Manufacturers. One of the major positive aspect which is expected from this reform is not only Economic growth but also ease of doing Business.
One of the major setback Telecom Industry faces, now a days, is Cascading Effect of Taxes (Indirect Taxation) and problem with Classification of Service which is directly hampering the growth of this sector. But there might be an advantage, as there is Unified Taxation System, which indicates reduced Tax Avoidance and increase in Input Credit.
Already under current phase of financial burden, this sector might get a hike in Tax rates from 15% to 18-20%.
Mobile Wallet – From mere Telco services, industry have also grown to include complex services like – VAS (Value Added Services), Internet Services etc. and next Mobile Wallet Service. Also, regarding the “Point Of Taxation” there have been different opinions across Operators in country, on Indirect Tax implications on mobile wallet services.
Following are some more points on which the track of growth of TelCos will depend after implementation of GST :-
· Inter-linking charges to access other circles.
· Place of supply
· Power & Fuel – (Telco is 2nd Largest consumer of Diesel after Railways).
· Sale of SIM Cards.
· State-wise registration may be required (under SGST & IGST).
GST plans related to telecom sector of the country may be needed to figure, as it seems to come as a mixed packet of sweet and sour candies for this sector.