India government understands Internet-specific taxes and Digital India are incompatible

Posted on October 20, 2014  /  1 Comments

Apparently, the eight percent tax on the gross adjusted revenues of ISPs will not be implemented. Good.

TRAI had suggested a uniform licence fee of 8 per cent of the AGR (adjusted gross revenue) for all ISP and ISP-Internet Telephony licences.

Government levies licence fee on AGR of telecom firms after deducting some components that are not earned from telecom services.

TRAI had earlier also recommended that government levy 8 per cent licence fee from April 1, 2013, but the proposal was deferred then, after questions raised on revenue items that should be considered for calculating the final charges.

Industry body Internet Service Providers Association of India had said the move to increase licence fee on Internet services will adversely affect its target to achieve 175 million broadband connections by 2017 and 600 million by 2020 as it will increase service tariffs.

ISPAI had also said if government includes deduction of bandwidth and lease line charges to pass through than Internet rates will rise only 8 per cent. If not, then cascading effect will be to the tune of 25-30 per cent.


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