Phone and internet bills may go up as the government plans to levy a cess on telecom services to create a corpus for funding the ‘Swachh Bharat’ drive.

In a legal advice given to Department of Telecom, Attorney General of India is learnt to have suggested the government not to levy Swachh Bharat Cess on telecom spectrum as it would be illegal but can be imposed on telecom services by amending the Finance Act.

“AG has said that it is not possible for the DoT to levy the ‘Cess’ for the purpose of Swachh Bharat Kosh by way of an executive order. It will need legislative backing and impost of tax/cess is strictly construed,” an official source said.

AG has responded to opinion sought by the DoT if it is legally tenable to impose Swachh Bharat Cess on spectrum usage charges – a fee paid annually by telecom operators, through an executive order under the Indian Telegraph Act. The legal opinion has said that without a legislation, the impost will be without authority of law and it will be contrary to Article 265 of the Constitution.

“AG observed that imposition of this cess would be therefore illegal and he has answered in ‘negative to the proposal’,” the source said. The legal opinion, however, is positive to query of the DoT if Swachh Bharat Cess can be imposed like education cess.

“The AG in his opinion stated that since Telecom Service is a recognised service and covered by the Finance Act on which service tax, education cess and higher education cess is currently levied, it would be appropriate to amend the Finance Act and include a third kind of cess,” the source said.

Former Telecom Commission member Sadhna Dixit said that Swachh Bharat programme will have multiplier effect on the economy with improvement in health of citizens and increase in tourism. “Large number of people can take pride in contributing to the project. However, telecom operators will pass this cess burden on to consumers without distinguishing a poor man from others, specially when we are talking about affordability,” Dixit said.

Telecom industry body COAI has opposed the cess. “We are not in favour of it. It will burden consumers and will be against government agenda of providing affordable service specially when it is talking about increasing rural broadband and internet penetration,” COAI Director General Rajan S Mathews said.

“It is not an easy exercise for us as well. We will need to work out tax on calls per minute and make technical changes in networks,” he said.

Source: Moneycontrol.com