GST to Increase Tax on Services! Here how it affects the Telecom and Broadband Sector!

After demonetization last year, the Indian government is all set to introduce GST (Good & Service Tax) this year and it has already become the nightmare of many.

As per the latest information, GST has hit the telecom market and as per experts, it’s going to result in your increased mobile and broadband bills.

At present, telecom services attract 15% service tax, but once the new 18% GST rate kicks in, consumers will see an effective three percentage point rise in their phone bills. This means a consumer now paying a monthly bill of Rs 500 will have to spend Rs 15 more. Also the prepaid users will get a significantly less amount of talk time on a recharge.

Broadband and Internet services DEN BOOMBAND, which is part of the NSE-listed DEN Networks, said in a statement –

“Due to the GST rate of 18 per cent applicable with effect from 1st July 2017, your recharge amount will increase.”

Ex-CEO of Bharti Airtel Sanjay Kapoor was bewildered by the decision, especially at a time when the telecoms sector is passing through extreme stress. He said –

“The decision is a surprising one, given that you have an inter-ministerial panel looking into the financial woes of the sector, and the same time the government choosing to slap a higher GST rate that will hit consumption and negatively impact telco revenues,”

However, at the same time, cable and DTH bills are expected to come down in many states as so far these services attracted an entertainment tax in the range of 10-30 percent over and above the service tax levy of 15 per cent.

GST is touted as the single biggest tax reform since India’s independence in 1947 and is expected to add 2 percent to India’s GDP. It aims to subsume the various central and state taxes that are currently levied on goods and services, bringing India under a uniform tax regime.

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