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The Cabinet Committee of Infrastructure (CCI) recognised the importance of telecommunication towers sector and included it in the Harmonized Master list of Infrastructure Sub-sectors vide its gazette notification dated March 27, 2012. However, till date, no tax or fiscal benefit has been granted to telecom infrastructure sector.
The year 2016 was power packed with significant developments such as 4G roll-outs across the nation which jump-started the data growth in the country. Meeting the rapidly growing demand for 4G data will require carriers to continue to upgrade networks in 2017/18 and in turn this will need significant roll-out of new and infill sites.
More investmentsUnprecedented increase in adoption of digital services such as payments, e-governance and entertainment will necessitate further investments in the telecom infrastructure sector. Without infrastructure status benefits like tax / financing benefits, the industry will not be able to afford these long payback investments. Hopefully, the new Budget will correct that.
Telecom infrastructure sector should be allowed to refinance the existing ECB loans. Further the ‘end use’ of ECB should also be relaxed to include brownfield investments and acquisitions.
The sector should also be made eligible for issuing tax-free bonds and access to long-term low-cost debt from Infrastructure Debt Funds.
Telecom infrastructure service providers must be included within the meaning of the term ‘industrial undertaking’ for the purposes of section 72A of Income Tax Act.
To allow accumulated losses and unabsorbed depreciation in the hands of the telecom infrastructure companies similar to the benefit granted in 2002 to telecom service providers.
Tax depreciationIncrease in tax depreciation rate from 15 per cent to 65 per cent on batteries for industrial or commercial use (used as power back-up for telecom towers) will ensure cost recovery within three years of economic life of the batteries.
Petroleum and diesel must be brought within the ambit of GST so that the duties paid on it are available as ‘credit’.
(The writer is EVP and President, Asia – American Tower Corporation)
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