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Telecom Industry Seeks Levy Cuts, GST Relief in Budget 2026

The Cellular Operators Association of India has submitted pre-budget recommendations seeking major financial relief for the telecom sector. Key demands include a reduction in the License Fee from 3% to between 0.5% and 1% of Adjusted Gross Revenue. The association also proposes GST reforms, such as an exemption for regulatory payments or a reduced rate, to alleviate cash flow pressures. COAI argues these measures are crucial for funding digital infrastructure expansion and supporting India's broader economic vision.

Key Points: Budget 2026: Telecom Sector Demands Lower Levies & GST Reform

  • Cut License Fee to 0.5-1%
  • Pause Digital Bharat Nidhi contributions
  • Seek GST exemption on regulatory payments
  • Allow use of input tax credit
  • Recalibrate spectrum pricing models
2 min read

Union Budget 2026 Expectations: COAI seeks cut in telecom levies, GST relief

COAI proposes cutting license fees and reforming GST to ease financial stress on telecom operators and boost India's digital infrastructure rollout.

"current License Fee... continues to impose a significant financial burden - Lt Gen Dr SP Kochhar"

New Delhi, January 13

The Cellular Operators Association of India has submitted a set of recommendations to the government ahead of the Union Budget 2026-27, calling for a reduction in regulatory levies and reforms in Goods and Services Tax to ease the financial stress on the telecom sector.

COAI, the industry body representing telecom service providers, said the proposed measures are aimed at enabling further expansion of digital infrastructure and accelerating the rollout of next-generation connectivity in line with the vision of a Viksit Bharat.

A key demand relates to the reduction of regulatory levies.

Lt Gen Dr SP Kochhar, Director General, COAI, noted that the current License Fee, comprising a 3% levy on Adjusted Gross Revenue (AGR) and a 5% contribution to the Digital Bharat Nidhi, continues to impose a significant financial burden on licensed telecom operators.

The association has recommended lowering the License Fee to between 0.5 per cent and 1 per cent, stating that this would be sufficient to cover administrative costs. It has also urged the Department of Telecommunications to pause further contributions to the Digital Bharat Nidhi until the existing unutilised corpus is fully deployed.

On GST-related concerns, the Director General, COAI pointed to the growing accumulation of input tax credit (ITC) within the telecom ecosystem. To address this, the association has proposed a special GST exemption for regulatory payments, including license fees, spectrum usage charges (SUC), and spectrum acquired through auctions.

As an alternative, COAI has suggested reducing the GST rate under the Reverse Charge Mechanism (RCM) on these payments from 18 per cent to 5 per cent, describing the move as revenue-neutral for the government while offering liquidity relief to operators.

Additionally, COAI has recommended allowing telecom operators to utilise their existing ITC balances to discharge GST liabilities under RCM for license fees and SUC. According to the association, this step would help reduce cash outflows and enable effective use of accumulated credits.

Emphasising the evolving role of telecommunications, COAI said the sector is no longer a standalone vertical but a horizontal value-added enabler supporting multiple industries. In this context, it has called for a broader recalibration of spectrum pricing and assignment models to better reflect the sector's strategic importance in India's digital economy.

- ANI

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Reader Comments

P
Priyanka N
While I agree the sector needs support, I hope any tax relief is passed on to consumers. We still pay too much for data compared to many countries. Also, the focus should be on improving service quality in rural areas, not just operator profits.
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Aman W
GST on regulatory payments is a tax on tax. Makes no sense! The ITC pile-up issue is real and needs fixing. If operators have more cash, they can invest in infrastructure. Better networks help everyone - from farmers using agri-tech to students taking online classes.
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Sarah B
Working in tech, I see how crucial reliable, high-speed connectivity is for the startup ecosystem. Reducing the financial burden on telcos can accelerate innovation across sectors. This is a strategic move for Viksit Bharat.
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Karthik V
The Digital Bharat Nidhi point is valid. Why collect more when the existing fund isn't fully used? Government needs to be more efficient with the money it already has. Transparency in how these funds are deployed would build more trust.
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Nikhil C
As a small business owner, good internet is everything. If these reforms mean more stable connections and maybe even lower operational costs for my provider, I'm all for it. Hope the budget delivers.

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