Taxes On Mobile Cards to be Exempted for Those with Non-Taxable Income

A Parliamentary panel has asked the Pakistan Telecommunication Authority (PTA) to bound cellular companies to collect all details of consumers to avoid deduction of withholding tax/Federal Excise Duty (FED) on cards load from customers who don’t fall under taxable limit.

Senator Daud Khan Achakzai, convener of the Sub-Committee of the Committee on Delegated Legislation while presiding over the meeting said that the government deducts Rs. 35 as withholding tax and other taxes from the Mobile consumers on a card load of Rs. 100.

However, those with under Rs. 100,000 income per year are not liable to such taxes.

To resolve this, Mr. Khan asked PTA to restrict mobile companies to collect all details of consumers before issuing mobile phone SIMs to stop deduction of Rs 35 withholding tax/FED etc. from those whose income is below than Rs 100,000 per year.

Achakzai questioned FBR as where is it depositing the amount collected through withholding tax from non-taxpayer consumers who are not holders of National Tax Numbers (NTNs).

A senior official of the PTA told the meeting that the Authority only regulates functions of cellular companies and it has nothing to do with the deduction of withholding tax from the consumers.

“PTA does not regulate fiscal laws but it only regulates services of cellular companies”, he said, adding the deduction of withholding tax is the job of FBR and only they can devise mechanism to avoid deduction of withholding tax from consumers whose income is less than Rs. 100,000 per year.

He said the PTA held several meetings with the FBR over tax deduction, and FBR has appointed a consultant on the recommendation of the PTA.

Senator Kalsoom Parveen said that all cellular companies are accountable to the PTA as they are issued licenses from PTA only.

The committee also discussed rules, regulations, notifications and SROs of the PTA and asked the Authority to inform the committee about amendments in all existing rules and regulations during the next meeting.

PTA officials informed the meeting that the PTA is an autonomous body and it formulated 22 regulations under Telecom Act. The PTA also made 19 amendments in the exiting regulations, meeting was told.

PTA said that amendment in Telecom Act can be made through the Ministry of Information Technology following the approval of the Parliament.

Senator Muhammad Javed Abbasi said that if there is need of amendment in the Telecom Act, then the PTA should propose amendment and submit it to the committee after vetting it from the Ministry of Law.

An official of the Ministry of IT told the meeting that the existing Telecom Act has become outdated and the Ministry of Law is working over the amendments in the Act.

  • AFAIK, withholding tax can be returned by just submitting tax returns. Its an advance tax and it is adjusted with the annual payable tax when returns are submitted by the person.
    And every salaried person pays his tax with the salary, so he should be able to get back the advance withholding tax he paid.

    BTW, how to get it back? I don’t know yet..

    • Good luck. People are waiting to get it back since 3-5 years. If they ever return it, that’s how long it takes.

    • Yes, that’s still a mystery. I consulted admin branch of our department, which deals with taxes and salary, and even they don’t know shit about this. They don’t even know about withholding tax, like what kind of tax it is or how to process an application if someone wants to get it back. All they talk about is, how much will they be taking out of the salary.

    • Actually what happens is that withholding tax is also being deducted on salary. So say if my annual tax is 12000rs based on my salary and I have no other income, my employer would have already deducted and paid 12000rs to FBR.

      Now when I fill my return, ill show my tax payable as Rs 12,000. Attach the tax deduction certificate from my employer that they have paid 12,000 + withholding tax on other services (eg 4000) so in total rs 16,000, And ask FBR for a refund of Rs,4000. Now FBR does not give cash, what it gives is a Tax credit and I can claim credits next year.

      Assuming next year is the same situation, So i would paid withholding tax if Rs,16,000 against tax liability of Rs 12,000. And now I also have a Credit of Rs 4,000, So the govt owes me Rs 8000 which is carried forward to be claimed next year.

      This happens uptill Year 5. Tax credits can be claimed up till 5 years. after which it will expire. So the unclaimed tax credit of rs 4000 will now be expired and you will get nothing.

      So unless you have taxable income other than salary, withholding tax you are paying on all services is going to waste

      • So you are saying that if my income is not increasing AND I don’t have any taxable property then withholding tax is actually going to govt?

        • Exactly. Also not all WHT can be claimed by individuals. WHT on gas and electricity bills can only be claimed by business.

          WHT on interest income or Royalty income for example cannot be claimed by anyone as it does not fall under the normal tax regime

        • You need other income to get the WHT you are paying to be adjusted. so if you have an annual salary of less than 400k and you are tax exempt. all the WHT you are paying is going to FBR

      • Sorry Tahir, interpretation is wrong. Only income tax and now professional tax been deducted at source. No WTH is permissible to be deducted by any employer. WHT is only applicable on use of services and or products

        • interpretation is wrong?

          149. Salary.-

          (1) Every employer paying salary to an employee shall, at the time of payment, deduct tax from the amount paid at the employee’s average rate of tax computed at the rates specified in Division I of Part I of the First Schedule on the estimated income of the employee chargeable under the head “Salary” for the tax year in which the payment is made after making adjustment of tax withheld from employee under other heads and tax credit admissible under sections 61, 62, 63 and 64 during the tax year after obtaining documentary evidence (substituted for “such adjustment” by Finance Act 2007), as may be necessary, for;
          (i) tax withheld from the employee under this Ordinance during the tax year;

          (ii) any excess deduction or deficiency arising out of any previous deduction; or

          (iii) failure to make deduction during the year

          (“any excess deduction or deficiency arising out of any previous deduction or failure to make a deduction during the year” substituted by Finance Act 2007).

          Why do you people have to talk about things you have no knowledge about? I work in Tax!

    • What about non-salaried persons? Non-resident Pakistanis who’ve recently moved over to Pakistan and are solely living on savings and what about retired pensioners?

    • Maybe the tax that should be submit will be also be subtracted from WHT
      I.e WHT = 2500, tax is 10000, so tax payblke will be 7500 (10000-2500)
      I doubt it that the WHT is paid upfront.

  • However, those with under Rs. 100,000 income per year are not liable to such taxes

    Its not 100000 its 500000

      • correct. anyone with yearly income less than 400,000 does not need to be a tax filer, and thus he does not need to pay any taxes like income tax, WHT, GST etc. But, GST and similar instruments are indirect taxation and included in price of goods and services – thereby leaving no room to claim refund.

        • actually no. Sales tax is a totally another form of tax. It is on your purchases and not your income. It is MANDATORY to be paid by all consumers and CANNOT be claimed whatsoever.

          WHT however is not a separate tax, any advance tax deducted is WHT

            • Same taxes imposed on the rest.

              Tax on rich & poor for buying Pepsi: same
              Tax onrich & poor for buying petrol: same
              Tax on rich & poor for DSL internet: same
              Tax on rich & poor for recharging mobile cards: same.

  • “PTA officials informed the meeting that the PTA is an autonomous body and it formulated 22 regulations under Telecom Act. The PTA also made 19 amendments in the exiting regulations, meeting was told.”

    the word “exiting” in the above quoted paragraph should be “existing”. Things are publishing wrong under your editorship, please wake up Mr Editor! Thanks.

  • The parliamentary committee seems to have no clue of what to order, to whom, and how. For any such order to have effect you will need amendment in income tax ordinance 2001 exempting people with less than 100k income from tax. Second you need to make a mechanism to track such people, this is certainly not on issuance of Sim as suggested by the parliamentary committee, because income may increase overtime. Third PTA does not deal with income tax collection it’s FBR’s role let’s not confuse them. Finally there is a possibility in law for such people if they can get an exemption certificate from tax authorities and submit it to the telco they wont deduct tax from those people (this is a dead end generally as getting an exemption certificate is a nightmare for a common man).
    I wish we have people who know what they are dealing with in such committees.

  • Every month ministry of finance has to launder certain amount of money from treasury to foreign bank accounts.
    There are several cruel taxes fulfill the pockets of corrupts) on various products. and WHT on mobile loads is just a part of it.
    Which is unavoidable, even if you don’t have NTN or your income is well under taxable range.
    Its a kind of bhata tax which is imposed on poor to fill up the pockets of corrupts.

    I highly doubt if anyone with non taxable income has ever claimed it back, If yes then kindly share your experince and detailed procedure with us.

  • I believe it would never return at least not iny case, my employer deducts the tax and only provide me a payslip stating amount of tax deducted, on the other hand phone companies charge tax and never inform amount deducted, now even if I file a return I don’t know how much I ask FBR to credit if it’s to be credited and whom should I ask to benefit me during next years taxes. Therefore this kind of taxes should not be levied at all.

  • A poor man whose income is Rs. 300 daily is a tax payer in the form of GST, WHT on utility bills etc. The system carries many flaws

    • What if my parents or me earn less than 400,000 a year for the entire family? Then what happens?

  • NTN holders can get back the withhodling tax in form of adjustment while paying tax in the next year…

    Verified approach…
    1. While filing the tax form, fill in the withholding tax paid during the fiscal year – now cellular companies provides this information via online account / email / CSC.
    2. FBR site shows the extra tax paid under “Computations” tab.
    3. Provide this information to your employer/finance deptt. and they will adjust this extra paid tax while paying tax for the next year.

    Unverified approach…
    1. Choose the ‘Refund’ option from within FBR site (after log-in) and select the period/fiscal year.
    2. Mention the amount to be refunded and submit.
    3. Don’t know what happens this way… : )

  • گورنمنٹ یه بتاے که جس کی سالانه آمدن ایک لاکھ هو بھلا وه موبایل رکھ سکتا هے. اسکا مطلب هے که عوام میں مفت کی شهرت اور ڈھنڈورا پیٹنے والی بات هے.نه کوی ایسا ضرورت مند هوگا اور نه گورنمنٹ کو کسی کو چھوٹ دینا پڑیگی. سب بکواس هے ٹیکس فری آمدنی 4 لاکھ ھے اگر اس په چھوٹ دیں تو پھر هم انکو مانیں

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