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Unified levy for telecom operators seems a distant dream

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Unified levy for telecom operators seems a distant dream

At present, telcos pay different levies such as spectrum usage charge (SUC), licence fees and Universal Service Obligation Fund (USOF). On top of this, telcos charge 18 per cent GST from consumers that goes to the government's kitty.

According to reports, the government is planning to scrap a myriad of levies that it charges from telecom operators and introduce a single levy instead. It is hoping that single levy will simplify the levy structure for the telcos and the government as well. At the same time, the government wants the changes to be revenue-neutral, which means that introducing a single levy should not result in any loss to the exchequer.

At present, telcos pay different levies such as spectrum usage charge (SUC), licence fees and Universal Service Obligation Fund (USOF). On top of this, telcos charge 18 per cent GST from consumers that goes to the government's kitty. The cumulative levy - excluding corporate tax - of over 30 per cent for telcos in India are far higher than other countries. For instance, Chinese telcos pay 22 per cent cumulative levies whereas telcos in US pay 17 per cent. Telcos, primarily incumbents, have been asking the government to rationalise levies in order to sort out their financial mess.

But introducing a single levy is going to be challenging for the government. To calculate SUC charges, license fees and USOF, telcos have to determine AGRs (adjusted gross revenues). There's an ongoing dispute between the DoT (department of telecom) and telcos on the definition of AGR.

For instance, telcos launch promotional schemes regularly where they subsidise tariffs for consumers. DoT insists that AGR should be calculated on the actual tariffs, and not on the discounted tariffs. Similarly, telcos sell handsets bundled with talktime where revenues from handets sale go to handset maker. DoT says that both the talktime and handset costs should be part of AGR. In addition, DoT wants AGR to include revenues earned from non-telecom sources like rentals, deposits, sale of real estate assets and dividend income. The telcos don't agree.

For about 12 years, the controversial AGR issue has been disputed in various courts across the country, and even at the telecom tribunal TDSAT. The matter is currently pending in the Supreme Court. There are no doubts that the debt-ridden telcos are looking for relief from the government but unless the AGR issue is settled, getting telcos on board to implement unified levy is likely to be difficult.