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Indian Telecom Companies Face Crippling Government Tax Demands

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Telecommunications - Sputnik International
New Delhi (Sputnik): India's telecom industry is currently suffocating under debts with $13 billion owed to the government and $114.2 billion owed to banks.

A directive from the Supreme Court of India obliging telecom companies to pay their full share of the adjusted gross revenue (ADR) tax to the government by 24 January, has hit telecom providers hard.

Unable to clear the huge debt owed to the Federal Telecom Ministry, three major telecom service providers – Vodafone-Idea, Bharti-Airtel and the Tata Group have filed a “modification application” with the Supreme Court, seeking permission to negotiate a revised schedule of payment.

The AGR taxes that are owed include licencing fees and spectrum charges, which are calculated on a percentage basis.

The apex court has moved the hearing on the “modification application” to next week.

Bharti-Airtel and Vodafone-Idea with over 422 million and 141.66 million users respectively, face hefty losses of $7.2 billion and $3.2 billion respectively during Q3 2019.

Earlier, following the Supreme Court’s order, the Federal Telecom Ministry issued a demand notice worth $6.76 billion approx. (INR 48,000 crore) on Oil India Limited, the state-run hydrocarbon exploration and production entity for using its fibre optic network for internal communications. 

Oil India Limited is planning to appeal to the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) because it has not generated any non-telecom revenues using the license and spectrum, unlike the private telecom service providers.

Industry experts predict that Indian mobile users could soon pay 30 percent more for telephone and data services to compensate for the AGR debts and losses incurred by the telecom companies.

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