Date:09/06/2004 URL: http://www.thehindubusinessline.com/2004/06/09/stories/2004060902290400.htm

Back Basic players want duty cut on fixed wireless terminals

Mamuni Das

New Delhi , June 8

THE Association of Basic Telecom Operators (ABTO) has sought reduction of duties on the fixed wireless terminals to 5 per cent, in order to bring them at par with that levied on mobile handsets.

At present, fixed wireless terminals are subjected to 27.8 per cent of total duties which consist of 10 per cent basic customs duty and 16 per cent countervailing (CVD) duty, while mobile handsets are levied a concessional rate of 5 per cent basic duty only without any CVD.

In its pre-Budget recommendations to the Finance Ministry, ABTO has sought that fixed wireless terminals be treated like cellular mobile phones since they work on the same technology.

ABTO has also sought customs duty of 5 per cent for all telecom equipment, down from the current basic customs duty levels of 10 per cent or 20 per cent. It has also called for inclusion of items critical for provision of broadband service in the list.

The association has also said that while the benefits of zero import duty are extended to mobile switching units imported by cellular operators, the same are not applicable to mobile switching units imported by basic operators. Now that the basic service operators have acquired unified access licences which allow them to offer full mobile services just like GSM-based operators, the duties levied should be similar, ABTO has said.

ABTO has also requested that CVD should not be levied on imported telecom infrastructure that is not manufactured indigenously. At present most of the telecom infrastructure as well as handsets with the exception of mobile handsets are subjected to a CVD of 16 per cent.

The telecom body has called for an excise duty of 8 per cent instead of the present 16 per cent so that the domestic manufacturing industry gets a boost.

The association has also called for a value added tax (VAT) regime instead of service tax for the telecom sector. Or, in case the service tax is continued with, it should be pegged at 4 per cent, down from the current levels of 8 per cent, says ABTO. The VAT paid by the telecom sector on their capital equipment purchases should be available as credit against their service tax liability.

The industry body has also requested the Government to provide a 100 per cent tax exemption for 10 years to the telecom service providers like other infrastructure providers.