I don’t know what the official situation regarding data collection is in India but at the very least most websites will collect data of some kind. The best way to protect your privacy is using a VPN. Some are even free, but the only free one I would recommend is proton VPN ,otherwise Mullvad is very good and they let you pay for one month at a time. Also install uBlock Origin and ghostery in your browser. Firefox browser is better than chrome or edge. There are other things you can do, but this is fine for most people.

Unless they are also a certificate authority, they cannot read the encrypted content of you communications since today almost all sites use TLS encryption. They can see the names of the domains you go to and the number of packets. You can determine a lot from such meta data and it is valuable. They likely sell this information (hopefully anonymized ) to advertisers and data brokers.

Note this is true of all ISPs and may be more or less applicable in India.

You can avoid ISP spying to an extent by using a vpn.

I will preface this by saying my experience is from and Australian ISP so your laws will vary.

Like how far they can legally collect data? And illegally collect data?

You will need to look up you countries laws to see what is permitted to collect and is needed to be collected.

How, and what data they collect?

At a minimum they will be collecting NetFlow, or Sflow depending on the vendor, which will log what IP you used, what port you used, what IP you connected to, what port you connected to, how long the session took, and how much data was transferred.

Now one key thing to know here is while they know what IP you accessed, if you are using HTTPS they don’t know what URL you accessed with Netflow. They may see you accessed a Google IP but they do not know if you accessed google search, Gmail, youtube, or google workspace.

In order to find the specific URL you accessed, they will have to be doing DPI or SSL inspection which requires your PC to trust a certificate presented by the ISP equipment. To prevent this kind of inspection you should be using sites that use HSTS, which makes sure the certificate presented is the certificate Google actually uses.

How long does they store the logs?

That will up to your government to decide a minimum retention period.

What are the privacy practices to prevent these ISP spying?

As others have said VPNs using DNS over TLS (DOT) or DNS over HTTPS (DOH)

I don’t know at larger scale. But I’m with the event coordinators for a hackathon… And we’re setting up our own endpoints with monitoring enabled. The people in charge of organizing said if we’re serving internet to people we are legally required to see who is browsing what…

So I guess ISPs are definitely spying on your activities.

They monitor all your activity and will email your mom screenshots of your search history and inappropriate web pages.