DoT amends AGR definition to remove non-core items

The Department of Telecommunications (DoT) has removed a host of non-telecom revenue items such as property rental income, dividends and interest from the calculation of adjusted gross income (AGR). The move is valid from 1 October.

In a statement issued late Monday night, DoT introduced the concept of current gross revenue (APGR), which is achieved by removing all non-telecom revenue that telecommunications companies earn from their gross revenue (GR).

Gains from exchange rate fluctuations, insurance claims, capital gains on the sale of fixed assets and securities, income from the Universal Service Bond Fund, recovered losses on receivables, written back excess provisions, income from activities under the I&B license and income from activities other than telecommunications activities will now be excluded gross income to reach ApGR.

AGR would then be arrived from ApGR, after further removing some more non-telecommunications services related items. Items to be removed include “roaming revenue passed on to other eligible / eligible telecommunications service providers”.

Licensing fees and spectrum usage charge (SUC) are paid on the basis of AGR. Therefore, a lower AGR will mean reduced related taxes. However, SUC has been abolished by future purchases of the ether from auctions.

“This change will take effect from 1.10.21 and will apply to the charges arising from the licensee’s operations after that date,” the DoT said.

Changes have also been made to the licenses of other categories of telecommunications licensees, such as ISPs, national and international long-distance providers and those offering mobile communications via satellite services.

The new definition is part of the mega telecom assistance package announced by the government on 15 September to renew the sector and reduce the burden on industry, which was on the verge of becoming a duopoly in the private sector. Reliance Jio, Bharti Airtel and Vodafone Idea – the only loss-making private telecommunications company – are the three private players in the market at the moment. Vodafone Idea is banking on relief measures to revive its fortunes in India.

We have also asked the Department of Telecommunications (DoT) when it will get back bank guarantees (BGs) that had been provided to cover the frequency payments.

The definition of AGR has been the subject of a protracted battle between the government and telecommunications companies – in fact since 2005 – which DoT won in September 2019 in the Supreme Court.

The Court then supported the Government and extended the definition of AGR to non-telecommunications articles. But this left India’s older telecommunications companies – Bharti Airtel and Vodafone Idea – facing a combined Rs 1.02 lakh crore in AGR-related license fees and SUC fees, pushing the already struggling Vodafone idea further towards a potentially fatal financial crisis, analysts said. .

The new definition of AGR, which excludes all non-telecom revenues, could help remove all the doubts and gray areas that have been a point of contention between the telecommunications companies and the government, analysts said.

As part of the emergency measures announced last month, the government also allowed telecommunications companies to defer their AGR and frequency payments by four years, allowing for the conversion of statutory taxes into government equity. The package also greatly reduced the requirement for bank guarantees, among other measures, as the government sought to revive Vodafone Idea.

The person said that while Airtel has confirmed to the Department of Telecommunications (DoT) its acceptance of the moratorium, it has not returned to the stock conversion option yet. Mac Pro Tricks