COAI seeks levy and GST relief for telcos in Budget 2026–27

The Cellular Operators Association of India (COAI), as the industry body representing telecom operators, has been engaging with the government on measures to ease the financial pressures on the sector. The association argues that such relief is necessary to support continued network expansion and the rollout of next-generation connectivity, which are seen as critical to achieving the broader objective of a developed India (Viksit Bharat).

For the Union Budget 2026–27, COAI has submitted the following issues for the government’s consideration.

Reduction in regulatory levies

COAI has highlighted the cumulative burden of regulatory levies on licensed telecom operators. At present, the licence fee comprises a 3 per cent charge on adjusted gross revenue (AGR), along with a 5 per cent contribution towards the Digital Bharat Nidhi.

The association has proposed that the licence fee component be reduced from 3 per cent to between 0.5 per cent and 1 per cent, arguing that this would be sufficient to cover administrative costs. In addition, COAI has recommended that contributions to the Digital Bharat Nidhi be paused until the existing unutilised corpus with the Department of Telecommunications has been fully deployed.

GST-related issues and input tax credit accumulation

COAI has also raised concerns around the accumulation of input tax credit (ITC) within the telecom ecosystem, which it says is tying up significant amounts of capital. To address this, the association has suggested several policy options.

One proposal is to exempt regulatory payments, such as licence fees, spectrum usage charges (SUC), and spectrum acquired through auctions, from the levy of GST. As an alternative, COAI has recommended reducing the GST rate under the reverse charge mechanism (RCM) on spectrum payments, licence fees and SUC from the current 18 per cent to a lower 5 per cent slab, noting that this would be revenue-neutral for the government while helping to limit further ITC accumulation.

The association has also proposed allowing telecom operators to use their existing ITC balances to discharge GST liabilities under the RCM for licence fees and SUC. According to COAI, this would reduce immediate cash outflows while enabling the utilisation of accumulated credits.

More broadly, COAI has argued that telecom services now function as a horizontal, value-added enabler across multiple sectors rather than a standalone vertical. In this context, it has called for a reassessment of spectrum pricing and assignment models to better reflect the sector’s evolving role in the economy.