No Tax Cut for Telecom – Claims 'The News'

Federal government will not reduce GST on telecom services as it has got no other way of easy collection of GST for revenue generation, reports ‘The News’ – however, reporter said that SIM activation tax may see a decrenebt by 40 per cent to Rs300 from Rs500.

All stakeholders of the telecom industry had proposed to the government to withdraw SIM activation tax in upcoming budget in order to encourage more investment in the high-growth industry. ‘The News’ further reports that government has decided to reduce the activation tax and may waive it completely later once revenues from other sectors come.

Citing sources in the finance ministry, paper claims that initially government was considering completely removing the SIM activation tax and reducing the GST from 21 per cent to 18 per cent. However, it was prevented by the economic recession and the Supreme Court’s pressure to cut petroleum product prices, which may make it difficult for the government to achieve its revenue target.

Sources in government quarters of telecom sector revealed that the main objective of reduction in SIM activation tax is to provide relief for the operators in order to encourage them for further direct investment. It had also proposed to reduce the GST in order to increase the use of cellular services, but this proposal was rejected due to the economic crunch, they added.