NEW DELHI: After several months of dispute and even court proceedings, the Telecom Regulatory Authority of India (TRAI) on 6 January agreed that the licence fee (LF) and spectrum usage charges (SUC) should continue to be computed based on adjusted gross revenue (AGR).
The regulator clarified that gross revenue shall comprise revenue accruing to the licenced entity by way of all operations/activities and inclusive of all other revenue/ income on account of interest, dividend, rent, profit on sale of fixed assets, miscellaneous income etc. without any set-off for related items of expense.
However in the recommendations on ‘Definition of Revenue Base (AGR) for the Reckoning of License Fee and Spectrum Usage Charges’, TRAI introduced the concept of Applicable Gross Revenue (ApGR). ApGR would be equal to total gross revenue of the licensee as reduced by:
(i) revenue from operations other than telecom activities/ operations as well as revenue from activities under a licence/ permission issued by the Information and Broadcasting Ministry; receipts from the USO fund; and items of 'other income' as listed in the 'positive list' issued by the regulator.
Following disputes/litigations between licensor and licensees on definition of gross revenue and adjusted gross revenue under licence(s) granted by Department of Telecommunications for different telecom services and the need to rationalise taxes as stated in the National Telecom Policy 2012, the authority has suo motu decided to review the existing definition of revenue, licence fee rate and other related matters under section 11(1)(a)(ii) of the TRAI Act.
Further, there was also a reference from DoT in last July requesting TRAI to submit recommendations for delinking of licensing of networks from delivery of services by way of virtual network operators, etc., including associated issues such as AGR, terms of sharing of passive and active infrastructure, etc., under the unified licensing regime. A separate consultation paper had been issued in this regard on 5 December 2014 dealing with the issues under reference other than AGR.
The authority earlier issued a consultation paper on "Definition of Revenue Base (AGR) for the Reckoning of License Fee and Spectrum Usage Charges on 31 July 2014”.
Comments and counter comments were received from the stakeholders and an open house discussion was conducted at New Delhi by TRAI with the stakeholders.
Under the new recommendations, AGR would be arrived by deducting pass through charges from ApGR. No change is recommended in the existing definition of pass through charges (i.e. deductions) under different licences to arrive at AGR for the computation of LF and sue except the inclusion of access charges paid by TSPs providing international calling card services and toll-free charges.
SUC should be levied on AGR of respective telecom services which use access spectrum in operations or providing services.
Share of USO levy in LF should be reduced from the present 5 per cent to 3 per cent of AGR for all licences with effect from 1 April 2015. With this reduction, the applicable uniform rate of licence fee would become 6 per cent (from the present 8 per cent) of AGR viz. the 3 per cent of LF that directly accrues currently to the Government will not change.
ISPs having AGR less than Rs 5 crore in a year shall pay licence fee of Rs 10 lakh or actual LF based on the applicable rate, whichever is less.
Minimum presumptive AGR for the purpose of LF and SUC should not be made applicable to any licence(s) granted by Government for providing telecom services.
IP-I services may not be brought under the licensing regime.
For simplicity of administration, ease of verifiability and to avoid higher transaction and compliance costs, any netting of amounts paid to other entities should not be permitted for the computation of AGR so as to meet with the licence condition that does not permit setting off any related item of expense.
Accounting of deductions of pass through charges from ApGR to arrive at the relevant revenue base (i.e. AGR) for the computation of LF and SUC should be allowed on an accrual basis. However, in the case of service tax and sales tax/ VAT collected on behalf of the Government, deductions from revenue should be allowed only for the amount actually paid to the Government.
(xii) Intra-circle roaming charges should not be allowed as deduction from ApGR for calculating AGR of the telecom service provider for the purpose of computation of LF and SUC.
The DoT should introduce a standardized process of verification with a unique code assigned to each item of revenue and PTC, along with clear codal instructions to be uniformly followed by all licencees and Controller of Communication Accounts.
