Government considers data usage tax as DoT studies feasibility

The government has asked the Department of Telecommunications to study the feasibility of a possible data usage tax that could raise additional revenue while encouraging responsible digital consumption across the country.

The Indian government is examining the possibility of introducing a tax on mobile data consumption as part of a broader effort to expand revenue sources within the telecom sector. The proposal was discussed during a recent review meeting chaired by Prime Minister Narendra Modi, according to reports citing officials familiar with the matter.

The Department of Telecommunications has been asked to conduct a detailed study on the proposal and assess its feasibility by September 2026. The evaluation will explore different models for implementing such a levy and examine its potential economic and social implications.

Officials said the idea is not limited to raising government revenue. The policy discussion also includes measures aimed at encouraging more responsible digital habits, particularly among young users. Authorities believe that a carefully structured approach could help promote healthier patterns of data consumption while discouraging excessive screen time.

Revenue potential and industry concerns

The proposal comes as the government explores ways to diversify telecom-related income beyond traditional sources such as spectrum auctions and licensing fees. Currently, consumers already pay an 18 percent Goods and Services Tax on mobile recharge plans.

Industry estimates indicate that India’s mobile data usage reached roughly 229 billion gigabytes in FY25, reflecting the country’s rapidly expanding digital ecosystem. If the government were to introduce a levy of ₹1 per gigabyte, it could potentially generate close to ₹22,900 crore in additional revenue.

However, the idea has drawn criticism from some industry experts. Satya N. Gupta, a former principal advisor at the Telecom Regulatory Authority of India, warned that implementing such a tax could be difficult in practice.

According to Gupta, a data usage levy may disrupt services for consumers and could slow innovation in India’s rapidly evolving digital sector. He also cautioned that policies that increase the cost of connectivity might undermine the country’s ambitions to remain a global leader in digital technology and internet-driven services.

The Department of Telecommunications is expected to present its findings and recommendations after completing the feasibility study later this year.