DoT may tweak definition of AGR for internet service providers

AGR would exclude service tax on provision of service and sales tax authority actually paid to govt if gross revenue had included as component of sales taxand service tax

Following the recommendation of the Telecom Regulatory Authority of India (Trai) suggesting that Internet service providers (ISPs) to pay 8% of their adjusted gross revenue (AGR) as licence fee, the Department of Telecommunications (DoT) has proposed to tweak the definition of adjusted gross revenue (AGR).

According to arecent discussion, the DoT has proposed that gross revenue for an ISP should beinclusive of all types of revenue from internet service, internet accessservice, internet content, internet telephony, activation charges value added andsupplementary services, interconnection charges, roaming charges, permissiblesharing of infrastructure charges, without any set-off for related items of expenses.

AGR would exclude service tax on provision of service and sales tax authority actuallypaid to the Government if gross revenue had included as component of sales taxand service tax. It has also noted that roaming revenue actually passed on toother eligible or entitled telecom service provider.Trairecommendation, however, will not apply to unified licence holders such as Reliance Jio Infocomm.

Trai has alsorecommended that companies with ISP licences with or without broadband wirelessaccess spectrum that was auctioned in 2010, would be liable to pay the licencefee on a presumptive AGR. This would be equal to the 5% of the totalauction bid amount that they paid in a particular circle.

The presumptive AGR would only exist as long as the roll-out obligations of the company arestill in place or till the time the company has not started services and therefore has no revenue.