Kathmandu, June 20

Internet service providers (ISPs) are likely to increase the subscription charge on the internet services they provide in the next fiscal. In the budget of fiscal 2018-19, Finance Minister Yubaraj Khatiwada has brought a provision that has levied income tax of 13 per cent on telecommunication services charge (TSC), which the ISPs also have to pay.

Previously, this income tax was not applicable on the TSC for ISPs. As a result of this increase, the service charges for telecommunication services like voice call, internet, SMS and others could rise.

“Due to the provision that has increased the income tax rate on internet services, the internet subscription charge will likely rise in the next fiscal,” said Sudheer Parajuli, former president of Internet Service Providers’ Association of Nepal (ISPAN).

“We are planning to add the TSC on the internet services we provide and it will be effective in the next fiscal. The TSC increase will surely make the internet, phone calls, SMS, and other telecom services more expensive,” he added.

However, the Ministry of Information and Communications (MoIC) has said that they are studying the price of internet bandwidth in the international market. “We have started a technical study on whether it is necessary to raise the price of internet services by the ISPs and also on whether telecom companies need to raise their rates,” said Mahendra Man Gurung, secretary of MoIC.

“The government will do its best to create an environment whereby the price of telephone and internet services is not raised,” he added.

While presenting the first federal budget of 2018-19, Minister Khatiwada had announced of increasing the income tax rate on internet and telecommunication services. The new corporate income tax has been increased to 30 per cent from 25 per cent. Some experts have said that the increase in TSC could hamper access of telecommunication services for poor people.

“The government says it will expand internet services to each and every sector of the nation but the new provision in the budget will increase the cost of internet services, which the poor people may not be able to afford,” Parajuli stated.

In addition, the government has also announced in the budget of increasing the service charge on telecommunication service to 13 per cent. Previously, the government used to charge 11 per cent. The telecom service charge is only applicable to telecommunication operators like Nepal Telecom, Ncell, Smart Cell, United Telecom Ltd and Hello Nepal.

Nepal Telecommunications Authority (NTA) — the regulatory body of country’s telecommunication sector — has also started a study to see if the price hike by the ISPs would be justifiable.

“The ISPs cannot include the TSC in their subscription charge before taking permission from us, therefore we are conducting a study on that matter,” informed Min Prasad Aryal, spokesperson for NTA.