AGR in India: whose calculations are correct?

AGR in India: whose calculations are correct?

How much do various telecommunications companies owe the Indian government in unpaid adjusted gross revenue (AGR) dues? It’s no longer clear that anyone actually knows.

Recent reports from the Indian press indicate that India’s Department of Telecommunications (DoT) is ready to study documents submitted by the companies involved on self-assessment of AGR dues and, potentially, issue revised demand notices.

The wide divergence between AGR dues assessed by Bharti Airtel and Vodafone Idea in particular and those estimated by the DoT has been triggered by a number of factors, according to analysts quoted in the Indian media. They include key deductions disallowed by the government, differences in accounting treatment and duplication of demand items.

Whatever the reasons, the differences are significant. Both Bharti Airtel and Vodafone Idea have calculated their AGR dues at well under half the DoT estimate. How this fits in with more than one Supreme Court judgment and DoT communication insisting that the DoT-assessed sums be paid is not clear.

Some commentators have even suggested that a major accounting firm could now become involved in some sort of dues reconciliation exercise, although the Supreme Court may feel differently when it again considers the matter next week.

However, as far as Bharti Airtel chairman Sunil Mittal is concerned, the case is now closed because, he has argued, the Supreme Court simply asked carriers to pay their AGR dues, without being clear about an amount.

Thus the (approximately) $1.75 billion AGR dues, based on Bharti Airtel’s self-assessment, so far paid to the government is theoretically the final word on the matter – though, given how long this issue has dragged on already, it probably isn’t.

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