Union Budget 2020-21: COAI raises AGR issue, seeks cut in levies at meeting with Nirmala Sitharaman

Amid mounting financial woes of the telecom sector, industry body COAI raised the issue of adjusted gross revenue and sought cut in levies like licence fee and spectrum usage charges during a meeting with Finance Minister Nirmala Sitharaman on Friday

Press Trust of India December 20, 2019 16:00:54 IST
Union Budget 2020-21: COAI raises AGR issue, seeks cut in levies at meeting with Nirmala Sitharaman
  • Amid mounting financial woes of the telecom sector, industry body COAI raised the issue of adjusted gross revenue and sought cut in levies like licence fee and spectrum usage charges during a meeting with Finance Minister Nirmala Sitharaman on Friday

  • The industry has also asked the government to create an infrastructure bank that will raise tax-free bonds, the proceeds of which can be used to lend to the companies at lower rates, Rajan Mathews, Director General of Cellular Operators' Association of India (COAI) said after a pre-budget meeting with the FM

  • The industry has also raised the issue of adjusted gross revenue (AGR) and higher levies during the meeting, Mathews said

New Delhi: Amid mounting financial woes of the telecom sector, industry body COAI raised the issue of adjusted gross revenue and sought cut in levies like licence fee and spectrum usage charges during a meeting with Finance Minister Nirmala Sitharaman on Friday.

The industry has also asked the government to create an infrastructure bank that will raise tax-free bonds, the proceeds of which can be used to lend to the companies at lower rates, Rajan Mathews, Director General of Cellular Operators' Association of India (COAI) said after a pre-budget meeting with the FM.

The industry has also raised the issue of adjusted gross revenue (AGR) and higher levies during the meeting, Mathews said.

The first thing that we highlighted was the matter of AGR, the high licence fee, and spectrum usage charges (SUC) that are being paid by the industry, Mathews said.

Union Budget 202021 COAI raises AGR issue seeks cut in levies at meeting with Nirmala Sitharaman

File image of Finance Minister Nirmala Sitharaman. PTI

"We represented that they be brought down... We urged that licence fee which is currently at eight percent be lowered to about 3 percent, and SUC which is presently at 5 percent be brought down to 1 percent... and to see if it could be done over a appropriate period of time," he added.

The comments assume significance as the debt-laden telecom industry is saddled with Rs 1.47 lakh crore in additional statutory dues in the wake of a recent Supreme Court ruling on AGR.

Telecom companies owe the government Rs 92,642 crore in unpaid licence fee, and another Rs 55,054 crore in outstanding spectrum usage charges.

According to government data, the liabilities in the case of Bharti Airtel add up to nearly Rs 35,586 crore, of which Rs 21,682 crore is licence fee and another Rs 13,904.01 crore is the SUC dues (excluding the dues of Telenor and Tata Teleservices).

In the case of Vodafone Idea, this number stands at a cumulative Rs 53,038 crore, including Rs 24,729 crore of SUC dues and Rs 28,309 crore in licence fee.

The remaining liability is with state-owned BSNL/MTNL and some of the shut/bankrupt telecom companies.

The Supreme Court had allowed three months to the affected telcos to cough up the amounts due to the government, and the telecom department subsequently shot-off notice to players to pay their revenue share dues within the timelines stipulated by the court.

The department has given option to operators to clear all the dues on self-assessment basis.

On AGR dues, Mathews pointed out that Department of Telecom has said they will await clarity from the Supreme Court.

Meanwhile, Mathews said that the industry has also asked the government to clear GST input tax credit dues worth about Rs 36,000 crore.

"We have also raised GST related issue... Our spectrum and licence fee are taxed at 18 percent because they are classified as services. We said they are not services," Mathews added.

COAI also urged the government to remove the high import duties on telecom equipment, that will only serve to increase costs for the cash-strapped industry and may hamper roll out of networks and new technology.

"We talked of duties on equipments... We said 4G equipment and 5G equipment should be brought to normal levels if not free because they fit into the PM's vision of connected digital India...," Mathews said.

Follow full coverage of Union Budget 2020-21 here

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