Union Budget 2017-18: Fair share of hits & misses for telecom sector: KPMG

Naveen Aggarwal, Partner and COO – Tax at KPMG in India on Telecom sector Budget 2017 has its fair share of hits and misses for telecom sector. The big hit appears to be the Government’s commitment to strengthening India’s telecom network with the allocation of INR 10,000 crore to the ambitious Bharat Net project. The fact that nearly 155,000 kms of Optical Fiber has already been laid down speaks volumes about the progress of the project. Connecting 150,000 gram panchayats will be a giant leap towards fulfilling the Digitization vision of the Government and will provide the necessary boost to all the players in the telecom ecosystem. Some of the tax incentives like the increase in the carry forward of MAT credit from 10 to 15 years, reduction in the corporate tax rate by 5 percent for MSMEs (turnover of less than Rs 50 crore) are welcome moves for mid-size telecom players. As expected, the FM has not proposed significant changes in the indirect tax regime in view of the impending GST. Higher allocation for M-SIPS incentives can be a good news for handset manufacturing companies. However, increase in the SAD on PCB for manufacture of mobile handsets is likely to increase the price of the handsets.Some key misses include clarity on retro-amendments, withholding tax on spectrum trading and recharge voucher etc.