Input Tax Credit must be paid on Towers: TAIPA India’s telecom tower body has urged the telecom department and finance ministry for inclusion of towers in the definition of items eligible to avail input tax credit under the GST Act. ETTelecom January 22, 2021, 17:10 IST

New Delhi: India’s telecom tower body has urged the telecom department and finance ministry for inclusion of towers in the definition of items eligible to avail input tax credit under the GST Act.

"Currently, the telecom infrastructure providers can not avail of the Input Tax credit against GST paid by them on telecom towers, which acts as an impediment to make further investments,” said T.R.Dua, Director-General, Tower and Infrastructure Providers Association (TAIPA).

“Although under the Central Goods and Services Tax Act, 2017 (“CGST Act”), GST credit is available for plant and machinery, but Telecommunication towers have been specifically excluded from the definition of plant and machinery provided in Explanation to Section 17 of the CGST Act. It would be pertinent to note that the draft GST bill had envisaged provision of the input tax credit on telecom towers; however, this provision was removed in the GST Act, 2017," he said.

As per TAIPA estimates, due to the non-availability of Input Tax Credit, the industry has to incur a loss of Rs 1.25 Lakh -1.5 Lakh per tower.

“Thus, during the last 4-5 years, the Industry has already lost Rs 2500 Cr of ITC so far. Going forward, the demand for telecom towers is likely to cross 50,000 towers on account of 5G, etc, which will lead to an additional loss of Rs 625 Cr to the Industry,” the body said.

The apex body has written to Ms. Aprajita Sharma, DDG(BPF), Department of Telecommunications (DoT) for urgent support and intervention regarding the issue of non-availability of Input tax credit on telecom towers, it said.

Further, this issue had been taken up by TAIPA during the recent meeting with the Secretary, telecom on 6th January 2021, so that it can be taken up with Finance Ministry prior to the finalization of Annual Budget, which will be finalized very soon.

The telecom towers were specifically exempted from the definition of plant and machinery under section 17(5)(d) of GST Act, 2017 which deprived infrastructure providers from availing the Input Tax credit against GST paid on telecom towers.

“Hence, the industry has been requesting for the inclusion of telecom tower under the definition of Plant and Machinery so that Input Tax Credit can be made available on telecom towers, since the last 4-5 years.”