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Telecom sector is bleeding! Will Modi govt offer relief in Budget 2020?

BusinessToday.In     January 31, 2020

Budget 2020: Union Budget 2020 comes at a critical time for the telecom sector. Hot on the heels of the Supreme Court's AGR (Adjusted Gross Revenue) blow, the telecom industry is expecting several revival measures from the Centre. As part of the Budget wishlist on the direct tax front, the industry expects the Centre to announce steps to expedite the tax litigation process. A huge amount in tax refund is stuck with the government, which is adding to their woes.  

The telecom industry has also demanded a reduction in levies, both licence fee and Spectrum Usage Charges (SUC). It has also asked the Centre to create an infrastructure bank that would raise tax-free bonds, the proceeds of which can be used to lend to the companies at lower rates.

Also read: Budget 2020: Watch Live Streaming on Aaj Tak, India Today, live telecast channels

In December last year, the COAI also raised the issue of AGR, licence fee and SUC. The telecom players want licence fee to be cut to 3 per cent from the current 8 per cent, while SUC should be 1 per cent compared to current 5 per cent, they believe.

FULL COVERAGE: Union Budget 2020

"The government aims to connect, propel and secure India with the help of digitisation. Therefore, the government will continue to allocate funds towards the development of telecom infrastructure in rural and remote areas, which is expected to result in significant allotment of funds for Universal Service Obligation Fund (USOF)," says Care Ratings.

Though any announcement on the AGR front from the Centre seems unlikely -- as the DoT is pushing hard on recovering pending dues from telcos -- any positive announcement regarding rationalising of the definition of AGR to exclude non-telecom revenues could be a big relief for them.

The telecom industry is saddled with Rs 1.47 lakh crore in additional statutory dues in the wake of the 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.

Government data shows Bharti Airtel's liabilities stand at Rs 35,586 crore, of which Rs 21,682 crore is licence fee and another Rs 13,904.01 crore is the SUC dues. Vodafone Idea's total dues amount to Rs 53,038 crore, including Rs 24,729 crore of SUC dues and Rs 28,309 crore in the licence fee.

Also read: Budget 2020: Date, timings, where to watch, expectations from Modi govt's most challenging Budget

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