The GST council, a committee headed by Finance Minister Arun Jaitley and comprising representatives of all states which is tasked to fix tax rates on various goods and services, has decided that telecom services will attract tax rate of 18 per cent, three percentage points higher than the current 15 per cent services tax.
The industry has expressed its apprehension over the higher tax rate saying that it will further stress the already bleeding sector. "Telecom industry hails GST as an iconic reform but we are disappointed with announced rate of 18 per cent….It will augment the existing burden of the industry further. This is also likely slowdown the planned rollout of infrastructure across the country…," said Rajan Mathews, director general of industry body COAI.
The industry's hue and cry over a meager 3 per cent hike seems to be out of place. Since the entry of Reliance Jio last September, the sector has undergone a complete transformation. The tariffs for data usage have fallen to rock-bottom levels for all operators whereas voice calls are now free for not just Reliance Jio customers but also most postpaid customers of Airtel, Vodafone India and Idea Cellular.
In the case of postpaid customers, most of them have cut down on their mobile expenses by shifting to lower-priced plans. For instance, in August last year, market leader Airtel introduced new 'Infinity' plan for Rs 1,199 which offered unlimited voice calling (local, STD, and national roaming) along with 1 gigabyte (GB) of 3G/4G data along with 100 SMS per day.