Updated: May 17, 2020 12:50:23 am
The three major private telecom companies, Reliance Jio Infocomm Bharti Airtel, and Vodafone Idea, have approached the government seeking either refunds of their pending Goods and Services Tax (GST) input credit or soft loans against the fund to help them tide over the liquidity issues due to the ongoing lockdown, sources close to the development said.
The three companies have sent letters asking that either these input tax credit (ITC) for the GST paid be allowed to them or they be allowed to take loans using this credit as a collateral.
Reliance Jio has pending ITC refund of Rs 18,000 crore, while Bharti Airtel and Vodafone Idea have pending Rs 10,000 crore and Rs 7,000 respectively. The three companies did not respond to mails seeking their response to the letter, or if they had gotten any response from the Department of Telecommunications (DoT).
Telcos may need to find another way out of liquidity crisis
While a soft loan against GST input credit is likely to help telcos tide over the current liquidity crisis, it may be problematic for the government to allow the same as it would have to follow the same process for other companies and sectors as well. The telcos may have to find another way out from the current liquidity crisis as there is little hope of input tax credit refund from the Finance Ministry.
A meeting in this regard was also held between the Cellular Operators Association of India (COAI) and DoT officials. The DoT, however, has not responded to the COAI or the telcos’ demands, according to sources.
“We have not heard anything definitive on what the government intends to do with this excess money that is now owed by to the companies. We had a meeting as recently as about two weeks ago when we met with the DoT secretary and raised this concern,” COAI director general Rajan Mathews told The Indian Express.
The issue was raised in November last year as well when the SC had ruled against the telecom companies in the adjusted gross revenue (AGR) matter. The telcos then approached the Finance Ministry seeking a refund of the ITC owed to them, but failed to get a positive response.
“As of now, this has become the ITC for entire last financial year. We had approached the finance ministry in the last week of March with the same request that it be refunded or some loans at MCLR (marginal cost of funds based lending rate) be allowed to us. We have not heard back on that,” an executive at one of the telcos, said.
Apart from the Rs 35,000 crore ITC refunds, original equipment manufacturers (OEM) are also learnt to have approached the government asking it to clear the Rs 20,000 crore pending dues owed to them by various public sector units. There has been no response on that either, the sources said.
“Both (telcos and OEMs) were told by the Finance Ministry that there would be no payments or refunds as of now due to severe liquidity crisis in the government,” an executive who attended the meeting with the Finance Ministry said.
Under pressure to work out a solution to keep the telcos alive following the AGR judgment, the DoT had last year written to the Finance Ministry, requesting the matter to refund the pending ITC of telecom firms be referred to the GST Council, so it could be expedited.
“Nearly half of all the small and large telecom vendors and outlets have remained closed over the last 7-8 weeks. So there is no cash flow as such,” a senior executive at Vodafone Idea said.
📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines
- The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.