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Narendra Modi government to reduce mobile phone bills because of this reasons

Telecom companies will face a lower tax burden compared with the current regime due to the availability of input tax credit. On Friday government announced that companies will need to recalibrate their cost and lower their prices to ensure the benefit of reduced tax incidence is passed to customers.

Telecom services are carrying a 15% tax, which includes 0.5% each on account of Swachh Bharat Cess (SBC) and Krishi Kalyan Cess (KKC). “While service tax is a pure value-added tax, the above-mentioned cesses are not. This is the reason that while no ITC (input tax credit) of SBC is available, the ITC of KKC is allowed to be set-off only against KKC.

These companies can’t claim the credit of value-added tax (VAT) paid on goods and special additional duty (SAD) paid on imported equipment.

However, come July, telecom services will attract an 18% tax but they will be allowed to avail full input tax credit of goods and input services used in the course of business.

These firms would also be eligible to avail credit of integrated goods and services tax (IGST) paid on both domestically procured goods as well as imported goods.


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