Internet prices to increase by 7% ! : The Hindu

hno3

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Jan 27, 2008
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Delhi
Source: The Hindu

Apparently, some bigger ISPs which provide some other services apart from internet service were providing them under "Internet licence" which has lower tax or something. Govt couldn't recover that money from them so now the customer and small ISPs are supposed to pay for that..
 

godric_gt

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Apr 26, 2009
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arre kuch din pehle hi to increase hua tha! abhi fir se?! dammit congress!
 


gaurang08

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This is a bhikari govt .. They just want to kill the common man , god alone knows how one is to survive in this country ..
 


xred

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Mar 3, 2011
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Its a BS article sponsored by ISP lobby. I think its a correct move by the government to remove the arbitrage between voice and data. How the hell on earth price will increase by if they put 8% tax on Adjusted Gross Revenue (AGR)?? Impact of this should be less than 3% IMO. Adjusted Gross Revenue = Gross Revenue - Bandwidth charges.So if an ISP is earning Rs 100 and they have Rs60 as bandwidth charges, they will have to pay 8% tax on Rs 40 (100-60) only i.e. Rs 3.2This step is very much required to ensure telecom operators pay their fair share of fees.
 

mgcarley

Founder, Hayai Broadband
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Jun 22, 2009
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Its a BS article sponsored by ISP lobby. I think its a correct move by the government to remove the arbitrage between voice and data. How the hell on earth price will increase by if they put 8% tax on Adjusted Gross Revenue (AGR)?? Impact of this should be less than 3% IMO.

Adjusted Gross Revenue = Gross Revenue - Bandwidth charges.

So if an ISP is earning Rs 100 and they have Rs60 as bandwidth charges, they will have to pay 8% tax on Rs 40 (100-60) only i.e. Rs 3.2

This step is very much required to ensure telecom operators pay their fair share of fees.

Where did you get this definition of AGR?
 

mgcarley

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ISPs move telecom disputes tribunal over uniform licence fee - Home - livemint.com

I think what you have confused is the term "pass through", which doesn't mean "bandwidth charges" as it seems to have been interpreted, but which hasn't been entirely well defined, either. What it relates to in the cellular market is things like roaming charges, but for ISPs it's a bit murkier being that generally you're talking about a service that is more or less fixed (when the license was written in 2007, mobile Internet wasn't really there yet).

At the time, it appears to have been a mechanism designed to prevent double dipping. For example, if a company leases some last mile from another company, then license fees should not be charged to both ISP and last mile provider, it should be one or the other - but due to a not very good definition all this appears to have been abused a bit by the cellular companies, who are mostly the ones under fire here.

The relevant clause in the ISP license:
18.2 For the purpose of arriving at the “Adjusted Gross Revenue (AGR)” the following shall be excluded from the Gross Revenue to arrive at the AGR:
(i) Charges from pure Internet service, activation charges from pure internet subscribers. Pure Internet Services shall mean any method / device / technology to provide access to Internet unless explicitly prohibited and all content available including web-hosting, web-colocation which is available on internet without access restriction.
(ii) Service Tax on provision of service and Sales Tax actually paid to the Government if gross revenue had included as component of Sales Tax and Service Tax.
(iii) Roaming revenue actually passed on to other eligible/entitled telecom service provider.


Otherwise, I don't see any mention about AGR being defined as "revenue - bandwidth fees". Bandwidth is a fundamental cost of doing business for an ISP, if AGR meant "revenue - bandwidth", then the license fee would be 8% on profit, not revenue (gross OR adjusted) and then ISPs would be trying to run at a loss or making like, 1 rupee profit.

Of course, then especially for any of the listed companies the CEOs would be ousted by the boards for not performing their fiduciary responsibilities adequately - and probably done for fraud, just for good measure - as they're obligated to the shareholders to maximize returns.