January 02, 2006

Telecom Fees and Indirect Taxation

In my opinion, Telecom Regulatory Authority of India (TRAI) is a progressive body, even if its recommendations are misinterpreted in the West(as when people say that VoIP is illegal in India) and rejected by other government bodies for parochial and political reasons. It seems that TRAI had earlier recommended that the regulatory fees be reduced, suggesting that fees be used “only for the universal service obligation and to cover administrative costs.” According to a published story, a senior TRAI official said, "India has very heavy taxation structure and reducing levies is essential to lower the cost to the customer, to universalise telecom services in real terms and increase the penetration in new markets, particularly rural areas." The industry had projected (I can not vouch for its voracity) that the tax revenue will indeed increase by reducing the tax rate. But the finance ministry has rejected the recommendation saying that “… it is important for us to increase the non-tax revenue and telecom is a growing source."

In a country where the telephone usage is exploding so much so that an auto rickshaw driver can be summoned on his cell phone, isn’t it regressive? By the way, many ministers participated (symbolically) in the recreation of the historical Salt March to mark its 75th anniversary.

Posted by aswath at January 2, 2006 04:25 AM
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