The department of telecommunications (DoT) is not expected to go ahead with a proposal to tax data usage in the country because of technical implementation challenges and concerns over the likely impact on the growth of data consumption, according to two officials aware of the matter.
The Prime Minister’s Office (PMO) had asked DoT in January to study if data usage could be taxed to help generate revenue for the government. The department was also asked to come up with a model that would promote data consumption for positive activities while curbing activities that would likely result in addiction, especially among children.
“This came as an idea and was raised in a meeting with officials from the PMO. We believe it will not be feasible to implement this at the moment,” a government official said on condition of anonymity.
The official added that there are other ways of curbing online addiction among children and the government is considering various other options and policy interventions.
Queries emailed to DoT on Wednesday remained unanswered at the time of publishing.
DoT was considering such a proposal following a direction given at a review meeting of the telecom sector chaired by Prime Minister Narendra Modi in January, Mint reported on 10 March. The department was asked to come up with a data taxation model by 30 September.
The government had flagged the growing spread of digital addiction among children in its Economic Survey 2026.
According to tech experts, if the objective was to address digital addiction among children, the appropriate approach should have been regulatory in nature, such as age verification, content restrictions and mandatory parental controls.
Internet dependency
“The government would have been trying to influence digital behaviour through this proposal. Seeing the tariff hikes and dependency on the internet, I don't think this tax, if implemented, would have led to curbing data consumption,” said Faisal Kawoosa, founder and chief analyst at Techarc, a research and technology analytics firm.
Kawoosa argued that implementation of such a tax would have gone against the government's strong digital advocacy.
“This would have appeared as regressive,” he said, adding that it was high time that operators capped data usage and set timings for categories such as gaming, streaming videos and social media to curb addiction among children.
Globally, countries have largely taxed telecom services and digital activities rather than impose a direct levy on the amount of data consumers use. While mobile users in several countries pay taxes on their data and telecom bills, a tax calculated on a per-GB basis remains relatively uncommon.
In India, users currently pay an 18% goods and services tax on mobile plan recharges. According to DoT, mobile data usage in the country was 285 billion GB in FY26, 24.5% higher than 229 billion GB in FY25.
Revenue streams
The total number of mobile subscribers in the country was 1.29 billion at the end of July compared with 1.16 billion a year earlier, according to the Telecom Regulatory Authority of India.
The data taxation proposal also assumed significance as the government has been looking to diversify its revenue streams from the telecom sector, which is dependent on spectrum auctions and licence fee from operators.
However, after the 5G spectrum auction in 2022, when telcos purchased airwaves for ₹4.3 trillion, only one spectrum auction was held in 2024, at which telcos spent only ₹11,341 crore, hinting at lower appetite for airwave purchases in the future.
Against a target of ₹1.1 trillion in FY26, DoT’s revenue was ₹79,533 crore as of December 2025 end, according to the details that the department shared with the parliamentary panel. DoT’s revenue stood at ₹84,794 crore in FY25.