How budget 2010 should respond to telecom sectors woes?

Telecom industry is facing a high degree of uncertainty with reference to the present provisions on tax deduction at source, especially on the income earned by the distributors of prepaid cards and with regard to payments made for the interlinking/ bandwidth charges.

So, the telecom service providers should make payments to other service providers towards interconnection charges and for using the bandwidth infrastructure. These payments should be considered by the payers as standard services not liable to deduction of tax at source and the revenue authorities should consider these payments as royalty or as fee for technical service or as rent and accordingly penalise the service providers for non-deduction of tax.

Unethical and unwarranted price wars are the reasons for the cuurent woes of an otherwise booming industry in India. The users will be only too happy to get everything free. Driving the business with jurisprudence is the cup of tea of right industrilists.     

Concentrated investment in specific parts of the country doesn't get the benefit of the telecom facility to the rural parts of the nation which is a challenge on capital rationing for the service providers. The solution that could address this issue is hiring telecom infrastructure from the infrastructure service providers. To facilitate such effective utilisation of infrastructure, the existing players should restructure their operations, by transferring the infrastructure to other entities.

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