Cellular Subscribers Pay 30% Taxes, But Why? [LTE]

Today we got a letter from annoyed telecom user. She insisted us not to reveal her real name or writing, instead, she wanted us to highlight this issue for her and millions of other cellular customers.

Letter said that this cellular subscriber is using a post paid connection, which costs her Rs. 2,000 as monthly rental fee. But, after adding taxes she has to pay over or around Rs. 2,650 each month. Here’s how she calculated her taxes:

  • Monthly Rental: Rs. 2,000
  • Sales Tax (19.5 percent): Rs. 390
  • Withholding Tax (10 percent after adding sales tax): 239
  • Total Bill: Rs. 2,629

Now, she’s paying additional Rs. 629, on average, every month in the name of taxes. In this situation she has got 2 pleas:

Plea to Government:

When will you stop looting this country? Are you not fed up yet? What are you giving us against whatever tax you collect?

We don’t have Gas, Electricity, pure water (and yes I am talking about major cities, not the rural country side area).

Will you ever spare us from this hefty tax rate?

Plea to Cellular Companies:

All the goods we use in our life come with a price. I agree till here! But ever you heard of a home appliance, a doctor fee or anything advertised as Rs. 2,000 but ultimately you will have to pay Rs. 2,629 to buy it?

Why do you falsely advertise prices? and not communicate us rates after including all the taxes? You ever heard a term called ethics?

Thank you!

This very short letter poses very serious question marks over the the business models of government and the cellular companies.

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  • Ali

    yah saza ha humra k hum Pakistani han islia asa hota ha humary sath

    • tahir

      g bilkul durust kaha ap ne

  • Talha Shakil

    This is really a very sad situation here. It is a simple principle that with big volumes margins are lower – but here our government does the opposite by charging 19.5% for telecommunication(100 Million taxpayers!) while the prevailing rate of GST is 17%!

    I would also like to inform the subscribers that the withholding Income Tax is adjustable against the taxes you already pay against your income (if any). You can get a tax collection certificate from your service providers and attach with your annual return to be adjusted from your applicable income tax.

    One other important thing that I would like to point out the author and others is that the tax amount (Rs. 629 in this instance) does not go to the service providers but goes the government. So technically they only advertise the charges that they actually charge. There is always a fine print that says that government taxes are applicable. This is true for every other products too – the displayed prices are always excluding taxes. Personally I feel that it should be mandatory to advertise the charges including all taxes so that the consumer knows what is it actually going to cost.
    So if you are comparing price plans it is better to do without involving taxes. The plan that is cheaper before taxes will always be cheaper after taxes too because the rate of tax is the same.

    • Irfan

      “This is true for every other products too – the displayed prices are always excluding taxes.”

      No, every product or service except telecommunication include all applicable taxes in the advertised price.

  • waqas

    Yes I agree
    Warid discountiued its service of last call cost you ….. just because our most of the illlitrate JANTA thought that they are over charging.
    As i work for some retail industry we also display price without tax as bold and total price in smaller font
    This is totally unfair also if we consider prepaid add 5% more as services charges
    Can some one give me the real answer why prepaid is paying this 5%

  • zee

    zardari aur nawaz hai hi chor

    • imran

      oh bhai is mein zardari aur nawaz sharif kahan say aagayee.

      yeh taxation to buarucrats lagatay hian, govt to is ko implement karti hai.

      • Irfan

        Phir b final decision government ka hota hai k koi new taxes implement kye jaye ya nahi.

    • tahir

      phir bhee log in choro ko apna kemti vote de deth hen afsoooooos

  • So who says that Pakistani people don’t pay taxes?

    We pay tax when use mobile phone
    we pay tax when we travel (petrol)
    we pay tax on electricity bills
    we pay tax on …….

    So IMF and Government Officials always hide the fact that even a Fakir in this country is paying tax

  • Umair

    Elect someone competent and with integrity and you’ll see this and similar problems gone.

    As long as we keep electing our friends, family members, and benefactors our Nation will suffer. Elect on Merit. Don’t sit home go out and vote this time.

    You want change then do something different this time. Vote!

  • Ritzy Phantom

    As for the TAX, i would say it is there in most of the countries but what return is people getting for their hard earned money is the concern here. “College” i like the phrase, even a Fakir is paying tax.

    People have no issue with paying taxes,they do it happily but if Govt provide them safety,jobs,education and health care in return. Otherwise, cash goes into deep pockets of corrupt govt officials. Good Luck Pakistan!

  • Kashif

    Very realistic and rightly pointing letter to the huge unjust move of this filthy govt. Now this is the kind of blogs which deserve to be here on propakistani. Thumbs up!

  • Fawaz

    But still we are sleeping.The Government is looting us and our country.We should protest against govt. like in Tunisia and Egypt.

  • Dr Zulfiqar Nohri

    I m using ufone postpaid since 1 year but i m unable to understand my bill calculations, i think postpaid user pay more than 30% tax.

    • imran

      yes you are 100% right.

    • Talha Shakil

      The tax structure on post paid and prepaid is the same. If anything 5% service charge is levied on prepaid customers on every recharge.

      The tax calculation has been explained a couple of times in the article and the comments as well.
      GST 19.5% of all your Charges (including line rent, add ons etc etc)
      Advance IT: 10% of all your charges & GST
      So if your bill is of 100 rupees – GST will be 19.5 and IT will be 11.95 (10% of 119.5) so your total bill will be 131.45. Meaning all in all 31.45% is the applicable tax.

      • waqas

        warid have fair billing system

  • rafay

    If you are a registered tax payer u can get that 10% tax back.
    And honestly i dont understand why the extra 5% on prepaid users this is totally unfair.
    And people in pakistan do pay their taxes it is the govt which needs to show where these taxes go.

  • Hammer man

    sorry to rub salt into the wound but in reality there’s more than meets the eye here.
    the complainant would be paying Rs2,590 if the taxes were 29.5%.
    But since withholding tax applies after sales tax, hence due to this 10% we all end up paying a total of 31.45% of taxes as it’s applicable on the line rent together with the sales tax.

    ps: 10%.. hmm sounds like a familiar figure :P

    • Rameez Kakakhel

      Sure is a familiar figure :P hahaha!

      • M Amin Durrani

        @Rameez.. i didn’t know that u’ll read all the way down! ;P

  • caveman

    well – how can the goverment generate tax revenue, if no one pays income tax then the next best way to get money is through goods and services. i would suggest that you either pay your way equitably through income tax of suffer indiscriminate service tax on basic stuff. you can have it both ways. According to information we have an unemployment rate of less than 10% but less than 20% pay income tax.

    how can we build the country if people dont pay their fare share.

  • ITS REALLY SIMPLE YAAR… YAD HAI ITALY MEI JUB PATROL MEHNGA HWA TU LOGON NAY GARIAN ROAD PAR PARK KER KEH CHALANY CHORE DEEN THEEN…

    SIMPLE STOP USING THOSE THINGS…COME TO SIMPLE LIFE.. BUT NO WE ARE PAKISTANI.. NOT A NATION THE BIGGEST DILEMMA …

  • Dr Fawad Wali

    We are pakistani.
    We can say bad to everything but when it comes time to do something decisive no one on this part of earth comes out.
    its just simple that we have started learning to live with it.
    when your cell got snatch or other things like robbery people have started coping with it as saying it was a tax to robbers.
    I am pretty sure if we comes out on highway and block it it will not even take 30 minutes to get yourself succeed. BUT we dont go for it. We vote for them then we blame for it.
    or we dont vote and then again blame.
    WHY???
    when we are not willing to take step then i think we dont have the right to blame anyone.

  • Umair

    Agree with Aizaz..
    Come-on everyone.. As per my opinion . We are the culprit of all the things happening to us.

    Log poochtay hain k Govt lootna kab band karay gi.. main poochta hun k bus itna sa tax.. aaj bhi shopping centers (Tariq Road / Haidery / Zamzama) main lakhon log DAILY shopping kartay hain (DAILY). 500 ki cheez 5000 main khridnay ko tayar hain. Bus tax daytay huay jaan jati hay. lolz

  • Hammad

    Agreed with Umair….!
    At least now we have to do something, i mean ok in a way we are not able to stop all these nonsenses and these greedy peoples but the thing we can do is “Stop” yes we can stop buying these things. And as far as our need is concern so for example if we will stop buying sugar not for whole life just for one week, so we will not die without sugar. But in the end i can bet on this that their minds will come back.

  • The other day, I was thinking about huge advertisement campaigns of cellular companies in Pakistan which consumer pays in the end.

  • Ali

    I know SHE must be using Mobilink. As I am using mobilink postpaid as well. There billing is very strange and the advance tax 10% is strange. Which never been adjusted with the bill of next month.

  • Very well said, but I don’t think it will hit the brains of our govt officials or our cellular operators, because “Loot machi hai bhai”

    Oh the other hand, I appreciate your work and this will create a social awareness.

    admin pai tussi great ho