Business News
DoT suggests cutting GST on telecom services to 12 per cent
Before the GST regime kicked in, effective tax rate on telecom services was 15 per cent.
The Department of Telecommunications (DoT) has suggested the finance ministry to reduce the goods and services tax (GST) rate on telecom services to 12 per cent compared with a existing 18 per cent, echoing the industry’s demand since the first time the rates were announced, according to information provided by telecom minister Manoj Sinha in the Lok Sabha on Wednesday.
“…the DoT…dated 01.12.2017 had recommended to the Department of Revenue during the process of the Budget exercise that a standard rate of GST at 12 per cent for telecom service should be fixed in place of existing 18 per cent,” the minister said.
Earlier this year, shortly after the GST rates were announced, the finance ministry had asked the telecom companies to “re-jig their prices” considering that the effective incidence of the levy will come down despite the services being under the 18 per cent slab, given that the service providers will be able to claim input tax credit.
However, the industry had questioned the government’s calculations, and said that its estimates did not concur with the Centre’s. Before the GST regime kicked in, effective tax rate on telecom services was 15 per cent — inclusive of 14 per cent service tax, and Swachh Bharat Cess and Krishi Kalyan Cess of 0.5 per cent each.
