The Cellular Operators Association of India (COAI), which represents telecom operators like Reliance Jio, Bharti Airtel, and Vodafone Idea, on Thursday said that regulatory levies — licence fee and contribution to Digital Bharat Nidhi Fund- which is at 8% of their adjusted gross revenue (AGR) currently, should be significantly reduced or abolished completely.
This is because currently telecom operators have been making huge investments in buying the spectrum and creating the infrastructure. Therefore they have argued that the licence fee along with other taxes limit their investments in regular technology upgrades.
The operators said the licence fee, at best, should cover the cost of administration of the licence only, which is to the order of 0.5% to 1% of the gross revenues, instead of the 8% paid currently.
Currently, telecom operators pay 8% of their AGR as levies to the government, which includes 3% licence fee and 5% to Digital Bharat Nidhi fund erstwhile USOF.
“Abolition/reduction of the licence fee related payments would facilitate the operators to plough the revenues back to the network for its continuous upgradation and expansion to be able to provide state-of-art services to the people of this country,” SP Kochhar, director general of COAI said in a statement.
According to Kochhar, since payments are charged on the basis of the AGR on the telecom operators, it is a double whammy for them, given the huge investments made towards procuring the spectrum as well.
According to telecom operators, with the separation of spectrum from the licence and assigning it at market price, the justification for imposing licence fee as well ceased to exist, long back.
Notably, in addition to paying the telecom specific AGR related amount, telcos also pay goods and services tax (GST) and corporate tax, just like any other company in the country.