New Delhi, July 24 (IANS): Hoping that the Goods and Services Tax (GST) Bill will be passed in the Parliament soon, the telecom industry has also sought the government comes out with a clear cut position with regard to levy of taxes on value added services (VAS).

"Given the broad framework of GST, it is expected that even under the proposed GST regime, the telecom service providers may face significant challenges. For the first time , both the centre and state governments will have powers to tax services... The proposed GST law should support the government's overall initiative of ease of doing business and offer a simplified tax regime to telecom service providers," said an ASSOCHAM-KPMG paper on Sunday.

Certain VAS such as ringtones are regarded as entertainment under certain states 'entertainment tax laws' and are therefore subject to taxation. "Since the service tax is also liable on the revenue generated from rendering such services, there is a dual levy in the form of service tax and entertainment tax."

"The government should clarify the applicable tax on such value added services. This would help move the industry move seamlessly to the GST, adding to the dynamic growth of the sector," said ASSOCHAM Secretary General D.S. Rawat.

The KPMG, in its note said: "The growth of the sector is highly dependent on a forward looking policy and regulatory environment that fosters investment, innovation and productivity. However, the industry is grappling with a number of challenges around complexity in policy, regulatory and taxation framework that impacts implantation of well-intentioned ideas."

The paper said the GST law should provide clear and comprehensive provisions with respect to coverage of telecom services for providing clarity of levy of taxes on VAS, infrastructure sharing and e-commerce transactions, since these transactions could have different treatment under GST.

It also said clear and specific place of supply rules should be notified for telecom services, specifically for pre-paid services, business-to-business transactions, business-to-customer transactions, mobile wallet and VAS.