GST IMPACT

ON

TELECOMMUNICATION INDUSTRY

Submitted by:

Group L
Hariti 12
Vaani Sachdeva 32
Anisha Jha 52
Mohit Chadha 59

Parul Gupta 72
 ABOUT THE INDUSTRY

Telecommunication sector is the one of the largest and blooming sector in India which
comprises of more than 1 billion subscribers with each day adding new subscribers to it. This is
the one of the fastest growing industry and in just ten years it had grown (approximately
25times) from 35 million to 1.2 billion subscribers with the maximum internet users.

Total Subscriber Growth

1400
1200
1000
800
600
400
200
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Telecommunication sector has played a major role in contracting the gap between the urban
and the rural population. With the advancement of the technology rural population are now
started drifting towards this sector and using the help of internet to enhance their businesses.
Various major private players like JIO, Vodafone, Airtel etc are also offering attractive plans to
connect with the rural population. The telecommunication sector has actually connected the
entire world altogether.

Government is also helping this sector to grow by providing liberal policies that is helping this
sector to strengthen their roots. Before 1981 the policies was so stiff that no private player can
enter into Indian telecommunication market for the purpose of doing business but with the
increasing pressure from the public and growing demand of the internet and communication,
the government was forced to liberalize the government policies.

Major part of Telecommunication sector accounts for the India’s GDP and employed
approximately 2.5 billion people in our country.
The immense competition between the players has changed the whole game a lot. With the
entering of new players like JIO with inexpensive rates on both Post-paid and prepaid plans has
lowered the profits of companies. This decrease in profits not only affected the companies but
the business of vendors as well
 GST?

 Goods and services Tax is comprehensive Tax levied on manufactured goods,

consumable goods and services at a national level.
 Under GST no distinction is made, it’s a way of unification of all the indirect taxes (state
and central) clubbed into one! GST has eliminated the cascading effect of the earlier tax
system.

The Goods and Services Tax (GST) is a value-added tax levied on most goods and services sold
for domestic consumption. The GST is paid by consumers, but it is remitted to the government
by the businesses selling the goods and services. In effect, GST provides revenue for the
government.

FEATURES OF GST

1. GST has two components under it State GST and Central GST. State GST is levied by the
State government and Central GST is levied by the Central government.

2. Tax slab rate under GST:

0%, 5%, 12%, 18% and 28%.

3. GST has a two-rate structure where there is low rate for necessity products and
standard rate general goods. Also, there is special rate for precious metals and stones.

4. Imports of goods and services in the country will also be a part of GST.

5. GST will eliminate the cascading effect and double taxation problem.

IMPACT OF GST ON TELECOMMUNICATION SECTOR

1. The telecom sector will attract 18% tax rate under GST, earlier it was 15%.
2. After the implementation of GST, the end customer would be directly impacted by the
increase of tax rate as communication sector is easily regarded as necessity service.

3. Mandatory annual audit compliance under GST, earlier the audit obligation was not
there for the telecom sector but after the implementation of GST its mandatory.
4. Telecom companies generally incur high costs and input credit costs are availed at first
point of contact they are spilt across the centers through ISD under service tax. But
under the GST regime, ISD is still unheard because of minute chances of splitting SGST
across other states.

5. Telecom companies evolved mobile wallets which have recently acquires a lot of
importance but when it was indirect tax before GST, their services were clouded
because several services across the country have different opinions of tax payment.
Under GST, it is expected to have clear inclusion of tax and payment options.

6. Telecom companies have interlinking charges between companies involved under single
name of Services so they are taxable as whole but in GST its included under various
apprehensions. So, it would be for now a bit confusing to evaluate under which aspect
the tax has to be paid.

7. According to Place of Supply of telecommunications, presently the service is provided at

the place of the receiver. But under GST it would be pertinent for the state that will
receive the revenue of SGST so paid and the telecom companies require to give a
detailed explanation as to what could be perceived of place of supply.

There are two possibilities of to the place of supply:

1. Place of service receiver

2. Location of service receiver

 AIRTEL
Bharti Airtel Limited is a global telecommunications organization with operations in 20 nations
crosswise over Asia and Africa. Airtel headquarter is in New Delhi, India, the organization
positions among the best 4 portable specialist organizations. In India, the association is
offerings 2G, 3G and 4G remote administrations, rapid DSL broadband, DTH administrations
including national and worldwide.

 After GST postpaid users will have bills increased by 3% and less talk time and usage for
prepaid users.
 Prior to introduction of GST airtel profits decined by 77% due the launch of Reliance Jio.
 So there are no significant changes in plans and tariffs for telecommunication services.
 All the plans are designed so as to compete with the Reliance Jio providing 84GB data
and unlimited calls for Rs399.
 Plans are offered from Rs 8 to Rs 499.
 Plans of RS349, 448 and 499 provide unlimited local and std. calls and upto 1.5 GB data
per day.
 For direct to home services taxes have come down to 18 percent compared to earlier
(15 percent service tax plus 10 percent entertainment tax)
 Airtel has also made partnership with company clear tax for filing gst returns online.
 Also providing customers with free additional data for filing GST returns online.
 JIO

Reliance Jio Infocomm Limited (RIJL),also called as JIO, is a broadband service provider which
provides wireless 4G LTE service network across the country. It is first company who has
launched “VoLTE-only” network in India.

Reliance Jio is the telecom service which includes free local calls, STD calls, roaming calls to any
network anywhere in India along with free 4G data access. .Before GST, Jio products were
charged under tax rate of 15% but now they are charging at 18% tax rate due to the
implementation of GST. So customers (both prepaid and postpaid) have to pay the increased
service tax for all the products.

GST EFFECTS ON JIO PRODUCTS - JIO FIBRE , JIO DTH & JIO 4G PHONES

JIO Fibre

It is the new product based on broadband service, launched as preview offer for the public
which will workable till 3 months (90 days). The customers will get high speed 4G Internet
Network, free voice calls and free SMS services. The users will get 100GB data/month for which
they will have to pay RS.4500 as installation charge which is refundable. This service also used
to charge at 15% before GST and 18% after GST.

JIO 4G PHONES

Before the implementation of GST, when a prepaid customer recharges with Rs.100, used to
get talk time of Rs.85 but after GST implementation, if same customer recharges with Rs.100
gets a talk time of Rs.82. The deducted amount goes as service tax. In case of prepaid, there is
deduction in talk time value which is the result of increased 3% service tax.

JIO DTH

Before the implementation of GST, If a bill of postpaid customer comes around Rs. 500, he had
to pay Rs.575 but after 1st July2017 he will have to pay Rs.590 for the same bill of Rs.500.The
increased 3% service tax will reflect in the postpaid bill.
JIO GST

JIO GST is a mobile first GST starter kit which includes GST Solution (software which will help
SMEs for tax filing under GST), Job Billing Application (used for generating summary wise
invoices) and JIO FI device (offers free voice calls and 24 GB data for a year) with a price of Rs
.1999/-only. It will be very beneficial for small businesses to maintain the records, file GST &
give the tax details about the products. JIO has launched this service in connection with Retailer
Associations of India (RAI).
 BSNL

Bharat Sanchar Nigam Ltd. was incorporated on 15th September 2000. Central Government
Departments of Telecom Services and Telecom Operations (DTO) handed over the business of
providing telecom services and network management, with effect from 1 st October 2000.

BSNL the only one which provides services and planned initiatives to reduce the gap between
the rural-urban digital divide in ICT sector.

GST IMPACT

Bharat Sanchar Nigam Ltd. (BSNL) is the only one from other telecommunication industry that
has not hiked tariffs for telecom services even after the GST comes into effect.

This strategy helped the old customers to retain in the company and attracted new customers.
In order to do so, company has launched various offers of RS.786 and RS. 599 for Eid-ul-fitr.
BSNL had added 600 broadband connections, earlier as of 30th may BSNL had 40,000 but as on
June 31st they had total of 40,600 broadband connections. This has been done because the
Union Finance Ministry created goods and service tax network for registration, returns filing
and payment. Traders and businessmen needed the internet.

Most of BSNL business is from landline and broadband segments so, the company concentrated
on increasing both landline and broadband connection.

BSNL has launched 2 plans

1. Rs 49 per month for landline connection including free voice STD calls and free calls on
every Sunday.
2. Rs 333 per month plan that offer unlimited data for 60 days.

“BSNL launched GST Suvidha Provider services collaborating with Masters India to assist
customers on various procedures involved” said by - Anupam Shrivastava the Manager Director.
The solutions can be availed in three categories –

 The Basic Plan (free up to 2,000 invoices),

 Plus Plan (Rs 1,999 up to 6000 invoices alongside other benefits) and
 The Pro Plan (for enterprises).