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TDSAT rejects Government’s plans to charge ISPs 8% of annual revenue

 The Telecom Disputes Settlement & Appellate Tribunal (TDSAT) has dismissed
the Government’s plans to charge internet service providers or ISPs a fee of 8%
of their annual revenue from April, 2013. The tribunal upheld an Internet
Services Providers Association of India (ISPAI) petition challenging the
government’s bid to tax internet and broadband services.

 The Telecom Disputes Settlement & Appellate Tribunal (TDSAT) has dismissed
the Government’s plans to charge internet service providers or ISPs a fee of 8%
of their annual revenue from April, 2013. The tribunal upheld an Internet
Services Providers Association of India (ISPAI) petition challenging the
government’s bid to tax internet and broadband services.

In July 2012, ISPAI had appealed to the Telecom
Disputes Settlement & Appellate Tribunal (TDSAT) for quashing the
government’s move, claiming it would force a change in the licence agreement
without mutual consent.

“Presumably, the government was
required to consider all aspects of the matter, including the question of
whether the petitioners, with regard to pure internet services vis-a-vis
services rendered by UAS licencees have a level playing field. If they do not,
appropriate measure may have to be taken but the petitioners could not be asked
to provisionally pay based on their annual gross revenue (AGR), where the final
decsion is to be taken at a later stage,” the tribunal said in its
verdict.

“The TDSAT judgement is a victory for
internet and broadband consumers,” said Ispai president Rajesh Chharia,
adding that it would help control internet and broadband tariffs in rural
pockets. At present, ISPs don’t pay any fee to the government. But those
offering internet telephony pay about 6% of their annual revenue as licence fee
to the telecom department.

The Department of Telecommunications (DoT) had
decided to impose a uniform licence fee of 8 per cent of gross revenue on both
categories from in a two-step process over two years. ISP’s would pay 4 per
cent while ISP-IT companies will pay 7 per cent from July 1 2012. Both will
have to pay 8 per cent of the adjusted gross revenue as licence fee from April
1, 2013. The ISPs at present do not pay any licence fees. Internet service
providers do not pay any fee to the government at present. Internet service
providers offering internet telephony pay about 6 per cent of their annual
revenues as licence fee to the government.

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