New Delhi, Jan 13: The Cellular Operators Association of India (COAI) 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 (GST) 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)