Telcos Demand Budget 2026 Tax Cuts: Seek Lower Levies, GST Relief
Overview
India's telecom industry body, COAI, is pressing the government for significant relief in the upcoming Budget 2026. Key demands include slashing the license fee from 3% to 0.5-1% of Adjusted Gross Revenue and pausing contributions to the Digital Bharat Nidhi. COAI also seeks GST exemptions or a rate reduction on regulatory payments and spectrum charges, aiming to ease financial burdens and accelerate next-generation network expansion.
Telcos Urge Budget 2026 Reforms for Sector Growth
The Cellular Operators Association of India (COAI), representing major telecom players including Reliance Jio, Bharti Airtel, and Vodafone Idea, has formally submitted its Budget 2026 wishlist to the government. The industry body is advocating for significant reductions in regulatory levies and tax burdens, arguing these measures are vital for expanding next-generation connectivity and achieving the 'Viksit Bharat' objective.
License Fee Reduction Sought
At the forefront of COAI's demands is a substantial cut in the license fee. The association proposes reducing this fee from the current three percent of Adjusted Gross Revenue (AGR) down to a mere 0.5-1 percent, which they argue would be sufficient to cover administrative costs. Furthermore, COAI requested that contributions to the Digital Bharat Nidhi be paused until the telecom department has fully utilized its existing corpus. The industry views these fees as a significant financial burden hindering sector development.
GST Policy Recommendations
COAI has also put forth specific recommendations regarding Goods and Services Tax (GST) policy. The association is pushing for an exemption from GST on all regulatory payments, such as license fees, spectrum usage charges (SUC), and spectrum acquired through auctions. As an alternative, COAI suggested reducing the GST rate under the Reverse Charge Mechanism (RCM) for these payments from the prevailing 18 percent to 5 percent.
This proposed GST adjustment, COAI contends, would be revenue neutral for the government while simultaneously helping to mitigate the accumulation of Input Tax Credit (ITC) for telecom operators. They also requested permission to utilize existing ITC balances to offset GST liabilities under RCM for license fees and SUC, which would conserve cash flow for telcos and help in clearing accumulated credits.
Spectrum Pricing and Sectoral Role
The industry body highlighted that the telecom sector now serves as a critical "horizontal value-added enabler" for all other economic verticals. Consequently, COAI emphasized the necessity of recalibrating spectrum pricing and assignment models to accurately reflect this essential role. Such adjustments are deemed crucial for fostering sustained investment and innovation within the rapidly evolving telecommunications landscape.
