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Telephone and Internet costs/charge to increase

Increase in TSC can hamper access of telecommunication to poor people

As we list out the information and communication sector points in the Budget 2075/76, we missed out a very important provision regarding the increase of income tax on internet and telecommunications services and Telecom service charge. Due to that provision in the budget, the internet and telephone costs/price will increase. The TSC increase will surely make the internet, phone call, SMS, and other telecom services more expensive and difficult to reach for some.

As per the first federal budget of 2075/76, Finance minister announced to increase the income tax of internet and telecommunication services. The new income tax will be now 30 percent.

In addition, he has announced to increase the service charge on telecommunication to 13 percent. Previously, they used to charge 11 percent only. The telecom service charge is only applicable to the telecommunication operators.

So, the service charges for telecommunication services like voice call, internet, SMS and more will increase by 2 percent points. These days, telecom operators have started promoting their prices inclusive of all applicable taxes. Such taxes include VAT and telephone service charge. After this provision, the telecom operator will revise the tariff or costs as per the new service charge.

Impact

Such provisions in the budget will not only increase the telephone, internet costs to the public but also impact the access to these services to the people. Some people also claim it to be contradicting their plan to increase the internet penetration and telecom indexes for next fiscal year. Source.

According to a tweet by Purushottam Khanal, Director at NTA. “Increase of tax, such as TSC can represent a significant obstacle to the usage of mobile services by the poorer sectors of the population, who could derive significant benefits from being connected”.

According to our survey done last month, we also found that people find the mobile data costs are expensive. Read here for more. Some also say the costs/tariff are highest in this South Asia region. Now with this provision, the costs/tariff will increase, putting more pressure on people’s wallet. The internet and telephone costs increase will also affect the growing telecommunication and internet service industry. Stakeholders in ISP business now doubt of achieving the government target in telecommunication sector indexes.

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