The telecom industry expressed disappointment with the budget, saying it had ‘‘nothing worth talking about’ ’ for their sector

What is really bad is that consumers would have to pay more for using telecom services, because FM has increased service tax by 2% to 12%. It means that as consumers you will pay Rs 20 more on your Rs 1,000 bill and so on. Telecom industry’s revenues are projected to be around Rs 90,000 crore in 2006-07. So, as telecom subscribers, we will pay about Rs 1,800 crore extra — a total of Rs 10,800 crore as service tax.”

That’s not a good step,’’ said an industry official.

Kobita Desai of Gartner said phone companies might reduce mobile tariff (because of recent developments like One India plan and reduction of certain levies) so as to compensate for increase in service tax.

The telecom industry said the FM had not helped bring down the total cost (in the form of various taxes) of the sector. They said telecom was performing well and was poised for next level of growth, which would come from smaller towns and villages that have high infrastructure costs. “There has been no reduction in overall tax structure and the sector is one of the highest taxed,’’ said Auspi Secretary General SC Khanna.

Said another industry official, “The minister has neither reduced revenue share fee that telecom industry gives to the government nor helped decrease infrastructure costs.’’

On the upside, FM has increased allocation from the USOF (universal service obligation fund) to Rs 1,500 from Rs 1,200 crore for providing phones in rural areas, and decided to extend it to cellular operators as well. But, officials said it was not enough, going by the expansion required in those areas.

(http://infotech.indiatimes.com)