AIRTEL, VODAFONE AND OTHER NETWORKS FACE RS. 90,000 CRORES TAX ISSUE

According to the latest reports, the telecom operators including Airtel, Vodafone, Reliance Jio and others would have to pay RS. 90,000 crore as a part of AGR (Adjusted Gross Revenue) Tax to DoT as per Supreme Court's order. The order comes as a result of a long-pending dispute between Telecom Service Providers (TSP) and Department of Telecommunications (DoT) since 2005.

To put in simple words, the TSP's would have to pay additional taxes for other services involving spectrum (3G and 4G services) to DoT as part of AGR which includes licence-fee and spectrum charges. The issue had been dealt several times in the Supreme Court and high courts in the past.

Finally, the judgement has been issued by the SC to pay the pending non-telecom revenue taxes to the central government.  "The government must review the impact of this decision and find suitable ways to mitigate the financial burden on the already stressed industry," Bharti Airtel expressed their distress as quoted by Business Standard.

Further estimates reveal the impact of the judgement could cost Airtel Rs. 50000 crore rupees and several crore rupees to other networks including Vodafone, Idea and Reliance Jio. The sum of all the TSP’s taxes is estimated to be RS. 90,000 crore. It could be pretty heavy on Vodafone and Airtel as they are already going through a critical phase after Reliance Jio’s entry in 2016.