Given the Rs 147,000 crore that the country’s telcos are supposed to owe the government by way of AGR ‘dues’—Rs 102,448 crore is owed by means of merely Bharti Airtel, Vodafone Concept and Tata Tele—it is natural to believe the country’s older telcos have shortchanged the exchequer. Now not surprisingly, there is also actually in depth outrage within the executive—and those folks of the lay public who acquire the government’s arguments—when the ones telcos put out so much smaller self-assessment evaluations on the AGR ‘dues’. So, while the government had estimated that Bharti Airtel owed `35,586 crore, the telco’s non-public estimate put the ‘dues’ at Rs 13,004 crore; for Vodafone Concept, the numbers had been Rs 53,039 crore and Rs 21,533 crore, respectively, they most often had been Rs 13,823 crore and Rs 2,197 crore for Tata Teleservices.
A visibly pissed off department of telecommunications (DoT) then asked the telcos to each deposit the variation between their own analysis and the DoT’s, or to supply documentary proof to once more their claims. While every Bharti Airtel and Tata Tele paid what that that they had assessed as their dues—along side somewhat bit additional to cover contingencies—Vodafone merely had Rs 3,500 crore, and couldn’t pay any further.
What makes the self-assessment figures a lot more suspect is that, first of all, every Bharti Airtel and Vodafone Concept had themselves put out so much higher estimates of AGR ‘dues’. Surely, the very most sensible losses they declared had been the result of provisions made for the ones ‘dues’.
The telcos have given quite a few reasons for this. While they have got been caught unawares and essentially extrapolated the DoT notices on AGR ‘dues’ first of all, on doing detailed calculations, they realised they owed so much a lot much less. And, this was for quite a few reasons. For one, the DoT hadn’t given them whole turn on for their expenses in numerous cases—underneath the regulation, telcos don’t pay licence fee (LF) or spectrum usage charges (SUC) on the interconnection fees they pay other telcos, on the other hand the DoT didn’t account for this since the telcos hadn’t submitted the full bureaucracy as proof. In some cases, like the money earned by the use of international roaming, the DoT issued a final rationalization most efficient in 2018, even supposing the subject have been pending for more than a decade. The telcos claimed that there were wrong calculations by means of the DoT along with issues bobbing up out of accounting permutations and the year wherein the source of revenue had been to be recognised, and the AGR to be paid on this.
Since no telco has made its calculations public, we will want to look forward to the results of an independent audit the DoT will get carried out of what the telcos have submitted; perhaps, the CAG may also do separate/concurrent audits. On the other hand, while we wait, it is important to realise merely how subtle the numbers are, throughout the sense that even a Rs 100 difference—between the analysis of the telco and DoT—in profits can jack up the AGR ‘due’. Of Bharti Airtel’s ‘dues’ of Rs 35,586 crore, Rs 21,682 crore is as a result of LF; of this, the most important amount is solely Rs 5,528 crore, the passion is Rs 9,816 crore, the penalty Rs 2,407 crore, and the passion on this is Rs 3,929 crore. In Vodafone Concept’s case, too, the most important amount due is just a fourth of the LF ‘dues’.
In numerous words, the full calculation of ‘dues’ might be very subtle to what is built-in/excluded throughout the AGR calculations. After all, with every passing year, the amount ‘due’ is upper by means of the rate of interest payable—this has ranged from 12% to nearly 17% over the duration for which the AGR is due. In fact, even the penalty rises in a similar fashion. Underneath the rules, the government levies a 50% penalty—on the main amount—if the telco will pay less than 90% of the amount due. Naturally, the higher the most important amount, the higher the dearth in what is paid, and the higher the probabilities of the 50% penalty being imposed.
An example will have to make this clear. Assume that, in FY07, by way of example, the DoT felt the telco understated revenues—or overstated expenses like interconnection charges—by means of Rs 100. In most cases, according to the LF/SUC, the telco would have owed the government Rs 12 as AGR ‘dues’. On the other hand, on account of there was no final ruling—of the sort that happened when the SC ruled on AGR ultimate year—the telcos didn’t pay according to the AGR notices sent by means of DoT. And, you’ll be able to’t blame them each—like the government, and its supporters do—since even the PSUs MTNL, and BSNL not at all made the expenses on DoT notices as they have got been disputed. Surely, in 2006, 2007, 2011, and 2015, slightly numerous courts set aside the AGR orders given by means of DoT (/bit.ly/2IKaxMo).
This Rs 12 that the telcos (see graphic) would have paid in FY07 had there been a final ruling on what comprised AGR, alternatively, has long gone up nowadays to Rs 62 as a result of LF, and Rs 32 as a result of SUC. That is, all of the ‘due’ for FY07 is as regards to similar to all of the profits that the telco was accused of understating! If the equivalent Rs 100 of understated profits is assumed in FY08, the amount ‘due’ nowadays will have to logically fall since there is also one a lot much less year of compound passion to pay, on the other hand it is if truth be told additional since, in that year, the rate of interest charged by means of the DoT was higher.
For most of the duration over which the AGR is ‘due’, as a result of passion and penalty expenses, it kind of feels the ‘dues’ upward thrust from 12% (8% LF, and 4% SUC) of the intended understatement in revenues to spherical 65-70%!
Two issues, then, need to be underscored. One, given how the passion, and penalty get compounded once a year, every rupee of the so-called understated profits will have to be considerably evaluated. Two, given there was no finality on what comprised AGR till ultimate year, even those—throughout the executive and the Best Court docket docket—who believe that at the side of even passion source of revenue on monetary establishment deposits throughout the definition of AGR is right kind will have to accept the amount payable must be the most important, not the penalty and hobby on the ‘dues’.