Telcos to bleed further as GST council rejects request for Input tax credit refund

The Indian telecom had a forgettable year and making it worse for the telcos, Sushil Kumar Modi, Chairman of the Empowered Committee of State Finance Ministers for the implementation of Goods and Service Tax has said that the GST council will reject the request of a refund of the input tax credit of Rs 36,000 crore. The announcement has dashed hope of the already struggling telecom companies of any financial relief.  

Sushil Kumar Modi who is also the deputy chief minister of Bihar said, "The GST Council has not considered this issue and even if it does come up for consideration, it will not be accepted. And such a huge amount, there is no question of refund." The telecom service providers have been constantly requesting the central government to refund the input tax credit or adjust the amount against their statutory dues but did not receive any response from the finance ministry. But the recent comment cleared the air that the government would not provide any relief to telcos.

3 major telcos sought for Input tax credit refund

As per a report in the financial daily, The Economic Times, all three major telecom companies have requested a tax refund of around Rs 36,000 crore. Mukesh Ambani led Reliance Jio has around Rs 18,000 crore with the finance ministry along with Rs 10,000 crore for Bharti Airtel and roughly Rs 8,000 crore for Vodafone Idea. The TSPs are seeking a refund on taxes paid on inputs including equipment used to provide telecom services. It is to be noted that the refunds would have helped the telecom companies is a big way as the companies are already struggling for the finances due to cut-throat competition which had pushed the pricing to the lowest level in the world for last 2-3 years.

Further, the Supreme Court's verdict on the definition of adjusted gross revenue (AGR) also added an additional burden of Rs 89,000 crore on Bharti Airtel and Vodafone Idea.

Lately, the telecom companies have been lobbying with the Department of Telecommunications (DoT) to discuss their case with the finance ministry and the GST Council, the nodal body pertaining to take the decision related to tax matters. Moreover, the demand was also raised with the ministry of finance during pre-budget meetings. Much to the disappointment of the telecom industry, Modi has rejected their demand. He also said, "There is no discussion on it. Such a request will not be entertained at all within GST Council, at any level."