Sindh Revenue Board (SRB) has issued a notification through which it has removed general sales tax on internet services with following conditions:
- For usage under Rs. 1,500 for 2MB connections
- For usage under Rs. 2,500 for more than 2MB and less than 4MB connections
So anyone with below 1,500 usage (with 2MB broadband speeds) or usage below Rs. 2,500 (for any broadband connection above 2MB and below 4MB) will be exempted from GST on internet services.
Previously the tax on internet services in Sindh was charged at 19.5%.
It is still unclear how 3G and 4G services are going to be exempted from internet taxes or not.
Alongside, through the same notification, SRB also reduced the General Sales Tax (GST) on telecom services from 19.5 percent to 19 percent.
According to the notification issued by Sindh Revenue Board (SRB)
The concessionary rate of 19% on the telecommunication services is available subject to the condition that the “persons providing telecommunication service shall pass on the full benefit of the reduced rate of tax to the service recipient and shall neither invoice/bill nor collect any extra charge/amount or surcharge on the value of the services.”
Persons not complying with this condition shall charge, collect and pay tax at that statutory rate of 19.5%.
At least one operator, Telenor Pakistan has announced to pass on the impact of 0.5% reduction of GST to its customers.
Telenor, unlike previously, will now charge different GST rates for its customers based on their location. Telenor’s GST on calls, SMS will be as following:
Other operators are likely to pass on the relief to their customers in Sindh as well. On the other hand, operators reluctant to pass on this benefit will continue to pay 19.5% GST to provincial revenue collection authority.
In the provincial budget of 2014-15, the Sindh Government had announced to reduce GST on telecom services from 19.5 percent to 18 percent but the decision was not approved by the provincial cabinet and continued to collect GST at the same rate (of 19.5%) from the telecom users residing in Sindh.
Exemption of Taxes on Internet Services
Sindh Revenue Board (SRB) announced to exempt taxes on internet broadband services on the monthly tariff of up to Rs. 1,500 for 2MB connections and up to Rs 2,500 for above 2MB and below 4MB speeds.
Billing beyond this limit will be charged with 19.5% GST.
SRB notification reads
“Internet services whether dial up or broadband, including email services and data communication network services of upto 2 mbps speed valued at not more than 1,500 rupees per month per service recipient and of more than 2 mbps speed but not more than 4 mbps speed valued at not more than 2,500 rupees per month per service recipient.”
Expemption of Taxes on International Leased Lines or Bandwidth Services
The revenue collection authority on the behalf of provincial government also waved off taxes on internet services used for commercial purposes.
But the tax exemption has been given to exporting IT companies only, according to the notification.
“Telecommunication Services involving charges payable on the international leased lines or bandwidth services used by software exporting firms registered with the Pakistan Software Exporting Board.”
Decision from Sindh government for removal of GST on internet services is now going to put pressure on KPK government, that has now become the only province that’s charges GST on internet services.
Not to mention, Balochistan and Punjab don’t charge any GST on internet services.
The decision to reduce and exempt taxes on telecom/internet lies in the hands of provincial lawmakers who can decide to give relief to the residents of their provinces.