The Department of Telecommunications (DoT) is not expected to proceed with a proposal to tax data usage in India due to technical implementation challenges and concerns over impact on data consumption growth. According to two officials aware of the matter, as reported by Mint, the Prime Minister's Office had asked DoT in January to study if data usage could be taxed to help generate government revenue. The department was also tasked with developing a model that would promote data consumption for positive activities while curbing addiction-prone activities, especially among children.
A government official speaking on condition of anonymity told Mint that the proposal came as an idea raised in a meeting with PMO officials and would not be feasible to implement at the moment. The official noted that there are other ways of curbing online addiction among children and the government is considering various other options and policy interventions. DoT was considering such a proposal following a direction given at a telecom sector review meeting chaired by Prime Minister Narendra Modi in January, with a deadline of 30 September for the data taxation model.
Tech experts argue that the proposal would not effectively address digital addiction concerns. Faisal Kawoosa, founder and chief analyst at Techarc, told Mint that the government would have been trying to influence digital behaviour through this proposal, but seeing tariff hikes and internet dependency, the tax would not lead to curbing data consumption. Kawoosa noted that implementation would have gone against the government's strong digital advocacy and appeared regressive, suggesting that operators should cap data usage and set timings for categories like gaming, streaming videos and social media.
In India, users currently pay an 18% goods and services tax on mobile plan recharges, while mobile data usage reached 285 billion GB in FY26, representing a 24.5% increase from 229 billion GB in FY25. According to Mint, the total number of mobile subscribers stood at 1.29 billion at the end of July, compared with 1.16 billion a year earlier. The data taxation proposal gained significance as the government seeks to diversify revenue streams from the telecom sector, which has been dependent on spectrum auctions and operator license fees.
Against a target of ₹1.1 trillion in FY26, DoT's revenue was ₹79,533 crore as of December 2025 end, according to details shared with the parliamentary panel. This compares to ₹84,794 crore in FY25. The revenue streams have been impacted by spectrum auction trends, with only one auction held in 2024 at which telcos spent only ₹11,341 crore, following the ₹4.3 trillion spent in the 5G spectrum auction in 2022.
