The Indian government is considering banning unlicensed VoIP telephony.

A report in the India Times said that the government is concerned that it is losing funds because internet telephony users avoid the 12 per cent service tax and six per cent revenue tax levied on standard calls.

Security issues are also being touted as a reason for the decision.

Under the proposals, local ISPs would have to furnish details of internet telephony users and the amount of time they spend using such services. It is possible that the proposals would also ban foreign ISPs from the market.

Rajesh Chharia, president of the ISP Association of India, said: "It is essential that the government seeks this undertaking from call centres as these foreign service providers do not possess the requisite licences as mandated by the government of India for Indian ISPs."

According to the report, unauthorised ISPs are providing 30 million minutes of internet calls to corporates and service centres across the country.