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HomeUncategorizedDoT exempts non-telecom revenue for calculating levies on telcos

DoT exempts non-telecom revenue for calculating levies on telcos

NEW DELHI: The government on Monday amended the telecom licence norms to reduce the tax burden on telecom operators by exempting all non-telecom revenues, income from dividends, interest, property sale and rent, among others, for calculation of levies like licence fees and spectrum usage charges. The amendment forms part of the telecom package announced recently by the Centre. The old definition of adjusted gross revenue (AGR) upheld by the Supreme Court had led to a burden of around Rs 1.47 lakh crore on operating telecom service providers, including Bharti Airtel and Vodafone Idea, and pushed the sector into deep financial crisis. The exempted sources of revenue earned by telecom operators will be deducted from their gross revenue to calculate applicable adjusted gross revenue (ApGR), as per amendments published by the Department of Telecom (DoT) on Monday. Thereafter, already exempted categories under old rules like roaming revenues, interconnection charges and goods and services tax revenue will be deducted to arrive at the final AGR on which the government calculates its share of revenue. “This amendment comes into effect from October 1, 2021 and will be applicable to the dues which arise from the operations of the licensee after the said date,” the DoT said. According to a latest report by sector regulator Trai, telecom operators’ gross revenue declined by 3.08 per cent to Rs 64,801 crore in April-June 2021 quarter but their AGR, on which levies are imposed, increased by 16.33 per cent on a year-on-year (YoY) basis to Rs 51,335 crore, as per the old formula. The licence fees and spectrum usage charges (SUC) increased by 16.36 per cent and 20.2 per cent to Rs 4,103 crore and Rs 1,646 crore, respectively, on YoY basis. The exemption of several sources of non-telecom revenue is expected to reduce the levies significantly. The other sources of telecom operators’ earning that will be exempted from gross revenue to calculate ApGR include receipts from universal service obligation (USO) fund, revenues from activities under a licence issued by the Ministry of Information and Broadcasting, gains from foreign exchange rates fluctuations, insurance claims, bad debts recovered and excess provisions written back. The government, as part of the telecom reforms announced in mid-September, has already rationalised the interest rate for delayed payment of licence fee, a move that is expected to ease financial burden on the telecom sector and promote ease of doing business. The department will now charge 2 per cent interest, compared to 4 per cent levied earlier, above the one-year marginal cost of lending rate (MCLR) of State Bank of India (SBI) for delay in payment of licence fees or any other statutory dues. The interest will be compounded annually. Telecom operators will also not be charged a penalty equivalent to 50 per cent of the short payment they made for the licence fees. The penalty was imposed if short payment was more than 10 per cent of the payable licence fees. Of the total AGR dues of Rs 1.47 lakh crore, around 74 per cent is on account of interest, penalty and interest on penalty. While the telecom reforms have allowed operators to pay the balance 90 per cent AGR dues after four years of moratorium (but within the stipulated time period of 10 years), the government is also providing relief to the companies by implementing measures to reduce the financial burden on them.

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