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India contemplates reducing the universal service obligation levy, again

This is getting to be boring. Every few years, decision makers at TRAI and DoT float balloons about reducing the USO levy. We write commending it. Nothing happens.

Another official said that besides increasing the payment tenure, the 5% levy towards Universal Service Obligation Fund (USOF) could also be reduced, more so as it would bring down the licence fee component for telcos without impacting the government’s revenues.

The 5% USOF levy forms a part of the 8% of annual revenue that telcos pay as licence fee to the government. “A call may be taken to keep the sector alive, but they (telcos) will have to invest in technology,” said a third official.

The Telecom Regulatory Authority of India (Trai) last week had also suggested to the inter-ministerial group (IMG) created to look into the financial stress of the sector that the USO levy component should be reduced to 3% of adjusted gross revenue (AGR) from present 5% for all licences effective April 1, 2015.

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