Report Wire - Union govt rationalises AGR definition by excluding non-telecom income

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Union govt rationalises AGR definition by excluding non-telecom income

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Union govt rationalises AGR definition by excluding non-telecom revenue

Giving an enormous aid to the telecom sector within the nation, the union cabinet in the present day redefined the Adjusted Gross Revenue, which is able to successfully carry down the liabilities of the telecom corporations to the government. The union cabinet in the present day determined to exclude non-telecom revenues of the telecom corporations whereas calculating the Adjusted Gross Revenue (AGR). As per the income sharing regime within the sector, the telecom corporations pay a portion of this AGR to the government as tax legal responsibility.
While asserting the choice to rationalise the definition of AGR, telecom minister Ashwini Vaishnaw mentioned that PM Modi has taken a daring resolution by eradicating the non-telecom income from AGR calculation. He mentioned a really previous and contentious litigated concern has been resolved in the present day with this variation.
However, this resolution shall be utilized prospectively solely, and the businesses shall be required to pay the prevailing AGR dues in keeping with the previous calculation. However, the federal government in the present day introduced a 4-year moratorium on cost of this due, giving some aid to the businesses that are dealing with big burdens of AGR dues. The corporations can have pay curiosity on the due quantity throughout the moratorium interval.
Apart from the telecom corporations, which won’t should pay income share as license charge on non-telecom corporations any further, in the present day’s rationalisation of AGR will even profit a number of PSUs which run captive telecom networks for his or her inner makes use of. As entities like GAIL, Oil India, Power Grid, Railways and so on have their very own captive networks, for which that they had taken telecom licences, the sooner AGR definition meant that they have been requested to pay telecom licence charge on their whole income from their most important operations.
This had resulted in absurd calls for raised by the DoT on such AGR calculations, the place GAIL was requested to pay ₹1.72 lakh crore, 4 instances its web price. Similarly, Power Grid was requested to pay ₹ 1.72 lakh crore, Oil India ₹40,108 crore as pending AGR dues.

The debates on AGR had began after the telecom sector was moved from mounted licence charge to income share mannequin in 1999. To calculate the income share the telecom corporations have been to pay the federal government, the Adjusted Gross Revenue (AGR) of the businesses have been to be calculated, and a portion of this shall be paid to the government.
But dispute began when the Department of Telecom (DoT) began together with non-telecom revenues of the telecom corporations within the AGR. This means, the businesses have been requested to pay telecom licence charge on income from varied sources like lease, dividend, curiosity, revenue on the sale of mounted belongings and so on. The corporations opposed it within the courtroom in 2005, saying that solely telecom associated revenues ought to be included within the AGR.
In 2015, the TDSAT had agreed with the telecom corporations, saying non-telecom revenues shouldn’t be a part of AGR. But the Supreme Court disagreed, and upheld the DoT definition in 2019, asking the businesses to pay the dues as per DoT calculation. Since the matter was underneath litigation for therefore a few years, the businesses had not paid their income share dues anticipating a beneficial verdict, which had meant that now they needed to could big quantities in direction of AGR dues, as they got solely 3 months to clear the dues totalling round ₹1.56 lakh crore by all the businesses.
However, in September final 12 months, the Supreme Court had allowed the businesses to pay the dues over a interval of 10 years. Vodafone Idea has the very best AGR due of round ₹58,254 crore, adopted by Airtel with ₹43,980 crore, Tata Teleservices with ₹16,798 crore and Reliance Jio with ₹70.53 crore. The Supreme Court had agreed to deferred cost after its verdict may have resulted within the collapse of the trade, and the nation’s banking sector would even be adversely impacted.
Apart from the rationalisation of AGR definition and moratorium on cost of dues, the cabinet in the present day introduced a number of different reforms for the sector. The govt has determined to lower the curiosity on delayed cost of licence charge, which is able to now be compounded yearly as a substitute of compounding month-to-month as per the present apply. Moreover, the penalty for delayed cost has been eradicated altogether.
Spectrum shall be allotted for 30 years in future auctions, towards 20 years as of now. The govt has additionally determined to permit spectrum licence holders to give up spectrum after 10 years by paying a give up cost. The govt has eliminated all of the restrictions on spectrum sharing amongst corporations, and the method has been simplified.
In one other main reform, the telecom customers won’t should fill paper kinds to take new connections. All buyer acquisition and KYC shall be achieved by way of digital kinds. Along with that, the prevailing kinds for all of the telecom connections issued in India thus far shall be digitised. This will assist in discount in value for telecom corporations as they should preserve the kinds in massive warehouses.
Moreover, there shall be no requirement of KYC for switching from postpaid to pay as you go or pay as you go to postpaid.
There shall be a calendar of spectrum public sale, in order that corporations will find out about it properly upfront. Similarly, the method of setting of cell towers have additionally been simplified and all bureaucratic hurdles have been eliminated.
Ashwini Vaishnaw additionally introduced that the core community know-how for 4G and 5G telecom shall be developed in India, and the nation will use domestically developed know-how in future.