Cellular Operators demand concessions in the budget
According to COAI (Cellular Operators Association of India) the 4% ACD paid on inputs by the telecom service providers is an added cost to them, which in turn increases the cost of main equipments like MSC, BTS/ BSC, HDSL/DWDM/ Routers, ATM/Frame Relay/ Ethernet Switch/ VAS Equipment etc. up to 4.64%.
Since the government has brought down the basic custom duty (BCD) on IT / Telecom products to zero, an additional duty of customs (ACD) of 4% has been imposed / levied on ITA bound items (including mobiles) and their inputs which attract nil duty in order to compensate for the internal taxes like sales tax, proposed state VAT, central sales tax, which apply to sale, purchase or transportation of goods in India.
Right now, the manufacturers are entitled to avail credit of this ACD for payment of excise duty on their finished goods. However, telecom operators being service providers and not manufacturers, are not eligible to avail credit of this 4% ACD.
8% CVD on packaged or canned software: COAI demanded that it should not be levied on the telecom software, as it imposes an additional financial burden on the operators and increases the cost of service. It said that a notification should be issued clarifying that telecom software satisfying certain specified conditions is customized software.