GST: Mobile Tower Companies To Pass On 18% Tax To Telecom Firms

Mobile tower companies will pass on their 18 percent tax burden proposed under the Goods and Services Tax (GST) regime to telecom operators which will lead to costlier phone bills.

“ Mobile tower companies will bill telecom operators as per tax imposed. Higher tax rate of 18 percent and non- availability of input tax credit will increase tax liability of telecom operators and cost of service to end consumers will increase or add on to the huge debt of telecom service providers due to the hyper-competitive market,” said Tilak Raj Dua, director general of TAIPA

The Tower and Infrastructure Providers Association (TAIPA) represents leading mobile tower firms – Bharti Infratel, American Tower Corporation, Indus Towers, Reliance Infrastructure and GTL Infrastructure.

Under the proposed GST regime, the government has fixed an 18 percent tax on telecom services compared to 15 percent levied at present. Further, mobile tower companies will also need to pay 18 percent tax on services they provide to telecom operators. Their is no input credit or tax refund provision available to them and hence they will pass on this tax burden to service providers.

"The prime objective of the government to introduce GST was to ensure that there is no cascading of taxes. Higher tax rate and non-availability to input tax credit defeats the whole purpose of Honourable Prime Minister's vision of 'One Nation, One Market, One Law'," Dua said.

He added that in the number of discussions with the government, TAIPA had stated the impact of such non-inclusion and higher tax rates which will further impact the overall financial health of the telecommunication industry.

There are around 4.5 lakh mobile towers in the country mounted with over 15 lakh base stations.