Telecom, beverage bodies disappointed with GST rates

Say it will make services, products more expensive

May 19, 2017 09:32 pm | Updated 11:25 pm IST - NEW DELHI

COAI said high GST rate will hurt consumers.

COAI said high GST rate will hurt consumers.

The Cellular Operators Association of India has expressed its disappointment over the 18% rate of tax under GST for telecom saying it would make services more expensive for the consumers as the industry is currently taxed at 15%.

The Indian Beverage Association (IBA) has also voiced its dissatisfaction with sweetened aerated water and flavoured water being placed in the highest tax slab rate of 28% combined with an additional cess of 12%.

Rajan S Mathews, Director General, COAI said: “We had submitted to the government that consideration must be given to the present financial condition of the sector and any rate beyond the existing rate of 15% makes the telecom services more expensive for the consumer.”

“This is also likely to slowdown the planned rollout of infrastructure across the country and will have an impact on flagship government initiatives like Digital India and Cashless India,” he said. The IBA, in a statement, said it was “extremely disappointed” at the effective tax rate of 40% on sweetened aerated water and flavoured water. This will have a negative ripple effect and hurt the entire ecosystem of farmers, retailers, distributors and bottlers.

Revenue Secretary Hasmukh Adhia, however, said that the higher tax rate should not have an effect on tariffs since telecom companies can now avail of input tax credits, something they could not do under the VAT regime.

“The telecom sector will certainly be eligible for more credits than what it is eligible for now and the effective incidence of the tax would be different for each telecom company depending on its proportion of B2B, B2C, prepaid and post-paid business,” MS Mani, Senior Director at Deloitte India told The Hindu .

Mr Adhia added that telecom companies will need to calculate their input credit before the rollout of GST and accordingly reduce tariffs, so that the bill amount for the customer does not increase.

He further warned that if the benefits received by operators, including telecom players as well as consumer durable firms, are not passed on to the customer, then the anti-profiteering provision would come into action.

“We would request telecom companies to make it public what input tax credit they would get and accordingly by how much they can reduce the tariff,” Mr Adhia said.

Separately, the Indian Beverage Association issued a statement on Friday expressing its disappointment with some aspects of the GST rates.

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