COAI Seeks GST Relief, Lower Regulatory Levies Ahead of Union Budget 2026–27

Graphic illustrating the telecom industry seeking GST relief and lower regulatory levies, featuring a communication tower, GST document, and currency symbols.

The Cellular Operators Association of India (COAI) has submitted a set of recommendations to the government ahead of the Union Budget 2026–27, urging a reduction in regulatory levies and targeted reforms in the Goods and Services Tax (GST) framework to ease financial stress on the telecom sector.

The industry body, which represents major telecom service providers including Reliance Jio, Bharti Airtel and Vodafone Idea, said the proposed measures are aimed at enabling faster expansion of digital infrastructure and accelerating the rollout of next-generation connectivity, in line with the government’s vision of a Viksit Bharat.

A key demand relates to the steep regulatory levies borne by telecom operators. COAI Director General Lt Gen Dr SP Kochhar pointed out that the current licence fee structure—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 reducing the licence fee to a range of 0.5% to 1%, stating that such a level would be adequate to cover administrative costs. It has also urged the Department of Telecommunications to pause further collections towards the Digital Bharat Nidhi until the existing unutilised corpus is fully deployed.

On GST-related issues, COAI flagged concerns over the growing accumulation of input tax credit (ITC) within the telecom ecosystem. To address this, it proposed a special GST exemption for regulatory payments such as licence fees, spectrum usage charges (SUC), and spectrum acquired through auctions.

As an alternative, the association suggested reducing the GST rate under the Reverse Charge Mechanism (RCM) on these payments from the current 18% to 5%. COAI described this proposal as revenue-neutral for the government while providing much-needed liquidity relief to telecom operators and helping curb the build-up of unutilised ITC.

Additionally, COAI has recommended allowing telecom companies to utilise their existing ITC balances to discharge GST liabilities under RCM for licence fees and SUC. According to the association, this step would significantly reduce cash outflows and improve the effective utilisation of accumulated credits.

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

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