Decoding Adjusted Gross Revenue (AGR): Guide To Compliance & Strategy

Introduction

In the telecom sector, the Central Government has the exclusive privilege of establishing, maintaining, and working telegraphs.Section 4of the Indian Telegraph Act, 1885 enables the Central Government to part with the exclusive privilege in favour of any other person by granting a licence on such conditions and considering such terms as it thinks fit. The licences granted to the service providersstipulates a fixed licence fee, which is payable by the service providers every year. Currently, every service provider is required to pay license fee calculated at the rate of 8% of the Adjusted Gross Revenue ("AGR") generated by it every financial year.

For over two decades, the interpretation of the term AGR had been a bone of contention between the telecom service providers and the Department of Telecommunication ("DOT"). On one hand, it was contended by the DOT that the AGR should not be limited to the revenue generated by the licensees from licensed