Union budget 2026: Telecom sector pushes for licence fee cuts, GST relief ahead of budget
Ahead of Union Budget 2026, telecom operators including Jio, Airtel and Vodafone Idea seek licence fee reduction, GST relief, and spectrum reforms as COAI outlines key demands.
With just four days remaining until the presentation of India’s Union Budget, Union Finance Minister Nirmala Sitharaman is set to present her ninth budget on Sunday, February 1, 2026. Like other sectors of the economy, the information technology and telecom sectors have placed specific demands before the government, and all eyes are on what Budget 2026 will offer them.
Below are some of the key expectations of the telecom sector ahead of the Union Budget 2026.
Telecom sector’s expectations from budget 2026
The telecom industry body, the Cellular Operators Association of India (COAI), has urged the government to reduce regulatory levies, including a cut in the licence fee from the current 3 per cent to 0.5–1 per cent, in the upcoming Budget.
In its submission to the government, COAI also recommended that contributions to the Digital Bharat Nidhi be paused until the unused corpus is fully utilised by the Department of Telecommunications.
COAI members include major telecom operators such as Reliance Jio, Bharti Airtel, and Vodafone Idea.
Demand to reduce licence fee burden
The industry body stated that it has consistently advocated for measures to reduce the financial burden on the telecom sector, which would enable further network expansion and the rollout of next-generation connectivity in line with the government’s vision of ‘Viksit Bharat’.
“The licence fee, which is a combination of the licence fee (3 per cent of Adjusted Gross Revenue) and Digital Bharat Nidhi contribution (5 per cent of AGR), is a huge financial burden for licensed telecom operators,” COAI said.
The association has requested that the licence fee component be reduced from 3 per cent to 0.5–1 per cent, purely to cover administrative costs.
GST relief sought for telecom operators
On Goods and Services Tax (GST)-related issues, COAI has recommended specific measures to ease the financial stress on telecom companies.
“Special benefits may be provided to telecom operators under GST by exempting regulatory payments such as licence fee (LF), spectrum usage charges (SUC), and spectrum assigned through auctions from GST,” the association said.
Alternatively, COAI suggested that the GST rate under the Reverse Charge Mechanism (RCM) on spectrum payments, licence fees, and SUC be reduced from the existing 18 per cent to 5 per cent.
According to the industry body, this move would be revenue-neutral for the government while helping telecom operators reduce the accumulation of input tax credit (ITC).
Proposal to allow use of accumulated ITC
COAI further recommended allowing the use of existing ITC balances to discharge GST liabilities under the Reverse Charge Mechanism for licence fees and spectrum usage charges.
“This will not only protect telecom operators from cash outflows but also help in utilising accumulated ITC,” it said.
Call for spectrum pricing reforms
The association argued that telecom is no longer merely a standalone vertical but has become a “horizontal value-added enabler” for all other sectors of the economy.
Accordingly, COAI stated that a recalibration of spectrum pricing and spectrum assignment models is also necessary to support sustainable growth of the sector.
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