On concern raised by the telecom operators on higher GST rates, the Telecom Minister Manoj Sinha has said that Communications Ministry will “analyse” the impact of Goods and Services Tax (GST) on telecom subscribers, and approach the Finance Ministry in case consumers or players face “genuine problems”.
Sinha said that “If there are genuine problems then definitely I will consult the finance minister....We will analyse what people were paying earlier, the impact of GST, and whether input credit is being passed on to consumers.” Though, he also added that as of now there are no plans to approach the GST Council or finance ministry in this regard.
The GST rate for telecom services is 18 per cent, higher than 15 per cent that consumers paid on their phone bills in taxes and cess, before GST regime. However, under GST, the telecom operators will also get the benefit of input tax credit, bringing the overall effective rates lower for consumers. The minister noted that the impact of input credit will bring taxation levels lower, and hence the effective rate will be closer to 16 per cent, though he also accepted that there may be an operational difficulty for players to claim input tax credit since they operate across geographies.