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Centre exempts non-telecom revenue for calculating levies on industry operators
The applicable adjusted gross revenue (ApGR) will be calculated after deducting the exempted sources of revenue earned by telecom operators from their gross revenue
The government on Tuesday announced exemption of all non-telecom revenues like income from dividends, interest, property sale and rent etc for calculating levies like licence fees and spectrum usage charges as part of its amendment of telecom licence norms to reduce tax burden on operators.
The changes were in line with the telecom package announced by the Centre recently. The old definition of adjusted gross revenue (AGR) upheld by the Supreme Court led to a burden of close to ₹1.47 lakh crore on telecom service providers, including Bharti Airtel and Vodafone Idea. The old system was also being blamed for pushing the sector into a financial crisis.
The applicable adjusted gross revenue (ApGR) will be calculated after deducting the exempted sources of revenue earned by telecom operators from their gross revenue, according to the amendments published by the Department of Telecom (DoT) on Monday.
Subsequently, the already exempted fields under old rules like roaming revenues, interconnection charges and goods and services tax revenue will be deducted to calculate the final AGR based on which the government will calculate 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 report by telecom regulator TRAI, the gross revenue of telecom operators fell by 3.08% to ₹64,801 crore in the April-June 2021 quarter. The AGR, on which levies are imposed, were, however, increased by 16.33% on a year-on-year (YoY) basis to ₹51,335 crore, according to the old formula.
The licence fees and spectrum usage charges (SUC) increased by 16.36% and 20.2% to ₹4,103 crore and ₹1,646 crore respectively in a year-on-year basis. The levies are expected to reduce following the exemption of several sources of non-telecom revenue.
The receipts of 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 are other sources of earning telecom operators’ revenue which will be exempted from gross revenue to calculate the ApGR.
The government as part of its telecom sector reforms rationalised the interest rate for delayed payment of licence fee earlier in September. This move is expected to relieve the sector of financial burden and promote ease of doing business.
The department will charge 2% interest 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 compared to the 4% levied earlier.
The interest will be compounded annually.
The telecom operators will not be penalised to 50% of the short payment they made for the licence fees. The penalty was imposed if short payment was more than 10% of the payable license fees.
The total AGR dues which amount to ₹1.47 lakh crore, around 74% of it is on account of interest, penalty and interest on penalty.
While the reforms paved the way for telecom operators to pay the balance 90% AGR dues after four years of moratorium (but within the stipulated time period of 10 years), the government is also providing relief to the telecom operation by implementing further measures to ease the financial burden on them.
(with inputs from PTI)
