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Telcos request govt to waive off Rs 20,000 cr service tax on AGR dues

Date: 25-08-2020
Subject: Telcos request govt to waive off Rs 20,000 cr service tax on AGR dues
After notices were sent to telecom companies (telcos) on the service tax they have to pay on their adjusted gross revenues (AGR), the Cellular Operators Association of India (COAI) wrote to the government, asking for a law to do away with taxes on the AGR dues, Business Standard reported.

According to the COAI, if this is not done, then the telecom industry will suffer incalculable losses.

"It's a double whammy, first, the Supreme Court asked the telcos to pay
additional, and now the service tax department wants to levy tax on it,” an industry source told the paper.

Tax demands are as high as Rs 20,000 crore, with the industry source putting it up to 15 percent of the AGR dues, the report said.

The COAI has thus written to the government, asking it not to levy service tax on AGR dues. And if it is levied, to have the money immediately refunded. The telcos have sought exemption under the Central
Excise Act.

The department started issuing notices after the Supreme Court in October last year ordered all telcos, including Bharti Airtel, Vodafone Idea, and
Tata Teleservices, to pay their past dues to the government.

Speaking to Business Standard, industry experts said more litigation would be on the cards, “The liability to pay service tax on licence fee and spectrum usage charges,  if any, was with the telecom operators paying the licence fee to the government. Given that the SC has now confirmed the additional liability on licence fee and spectrum usage charges, the service tax paid is no longer a pass-through as credit of service tax paid can no longer be availed of in the goods and services tax (GST) regime,” said Bipin Sapra, tax partner, EYIndia.

The COAI has also asked Parliament to approve, if needed, the exemption, said a source.“The issue is that the service tax paid would have been
available as credit to telcos to be used against output service tax or
GST. However, it’s not clear as to  how this credit would now be
available, given that GST was introduced more than three years
ago,” said Pratik Jain, partner and leader, indirect tax, PwCIndia to the paper.

Source:- moneycontrol.com

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