Jio’s underreported revenue brings losses to government

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Reliance Jio Infocomm, the telecom network that has been doing the rounds for all the right reasons and user-friendly plans. But according to recent reports, the company under reported Rs. 63.77 crore for three fiscal years till March 2015. They failed to include foreign exchange gains which lead to lesser license fee payment to the government. The five page audit report prepared by the general for post and telecommunications has been forwarded to the Mukesh Ambani owned telecom and also the Department of Telecom for a response.

The draft audit sent to Jio read that they had “realized foreign exchange gain amounting to Rs. 63.77 crore” during fiscal years 2012-13 to 2014-15 as per annual financial statements and revenue reconciliation statements the company furnished along with annual revenue statements. The forex gains were Rs. 1.29 crores in FY13, Rs. 41.67 crores in FY14 and Rs. 20.81 crore in FY15. “However, this gain was not included in the AGR (adjusted gross revenue) for the purpose of revenue share, which resulted in short payment of license fee.”

The draft pointed out that the non-inclusion of forex gains in AGR creates a violation of license conditions. One of the auditors speaking to news daily Economic Times said, “Under both judgments, the tribunal had clearly upheld the methodology used not just by Jio but the industry in regards to the treatment of forex gains/losses while computing the AGR.”

The Telecom giant has provided an explanation as to the company’s treatment towards the treatment of forex gains but they left the auditor dissatisfied. The draft states that Reliance Jio has 3 weeks to give a fresh response so that they can be incorporated in the final audit report.

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