Phone bills to rise following service tax hike: Airtel

Bills for mobile phones are expected to rise following a two percent hike in service tax, Bharti Airtel said.

NEW DELHI: Bills for mobile phones are expected to rise following a two percent hike inservice tax proposed in the union budget, service provider Bharti Airtel said Friday. 

"Service tax goes up from 10 to 12 percent and obviously that will be passed on to the customers," Sanjay Kapoor, Bharti Airtel chief executive officer for India and South Asia, said. 

He said the budget did not contain anything specific for the telecom sector, which is awaiting the new National Telecom Policy (NTP) scheduled to be announced in June. 

"On an overall basis, there is nothing that changes the fortunes of the telecom company. They have got more on stake on the telecom policy per se which we are expecting to follow the budget." 

The new NTP is expected to do away with roaming charges and implement one nation full mobile number portability (MNP), besides providing telecom the status of an infrastructure sector, which will help ease credit flows to companies for funding rollout plans or expansion activities. 

Finance Minister Pranab Mukherjee Friday proposed to raise the service tax to 12 percent from the existing 10 percent while presenting the budget for 2012-13, adding that a few essential services such as education will be exempted from the service tax. 

Kapoor also said that the telecom sector was already being heavily taxed on an overall consumption perspective. 

"About 30 percent of what customers pays to a telecom company goes in some sort of taxation or the other and I am not talking about indirect taxation which is income tax," Kapoor said. 

"Now when you increase the service service tax it is obviously a further enhancement of those levies for the industry," he added.