New Delhi: Service tax contribution from telecom sector alone to exchequer is likely to grow by 128% to touch Rs. 16,000 crore by 2010 from its current level of Rs.7,000 crore, especially when it is established that 1% growth in number of telecom subscribers leads to 1.93% growth in its contribution to service tax revenue to central government.
According to an Assocham paper onRs.Teledensity Serving Service Tax’, removal of any particular cap be it 49% or74% for FDI, particularly in telecom sector as it has been proved beyond doubt that as a result of openness in Indian economy, performance of telecom sector has been not only magnificent but outstanding too.
Percentage share of telephones in total service tax which used to be 48% in 96-97 would come down by 1/3rd to less than 15% by 2010 as by then service tax basket would have grown to over 140 items from the original three services in 1996, without adversely effecting telecom services contribution to exchequer because number of telephone subscribers base used to be 140.32 mn in 2005-06 and touched about 210 million in 2006-07 before growing at the projected level of 350 mn by 2010.
In percentage terms, telephone subscribers, be it fixed line or mobile from 210 mn in 2006-07 when it will jump to 350 mn shows growth of 66% and with the logic that 1% growth in telephone subscribers base when leads to 1.93% growth in telecom contribution to service tax by 2010, this growth would work out to be 128%.
In 2006-07, India could add its telephone subscriber base to 210 million and by 2010 in view of exponential growth that the telecom sector has been registering, it should not turn out to be an ambitious target that services sector contribution to national kitty from telecom sector alone would rise through the projected level of about Rs.16,000 crore in next three years.
The analysis says that the number of services in 1996-97 while were six, went up to 15 in the following year, before touching 27 in 1998-99, which went up to 68 in 2004-05 before touching 106 in 2006-07.