Breaking: Telcos to Exempt Majority of Pakistanis from Withholding Tax

Federal Board of Revenue (FBR) is going to propose legislation in the upcoming budget for 2017-18 to exempt mobile phone subscribers (who do not fall under the tax net) from payment of withholding tax.

This was revealed by FBR officials while briefing the Senate Standing Committee on Information Technology and Telecommunication which met with Taj Mohammad Afridi in the chair.

Once implemented, telcos will exempt majority of Pakistanis from witholding taxes that they pay on each card re-load.

Not to mention, subscribers will continue to pay GST or Sales Tax on service consumption.

Parliamentarians stated that it was a serious issue whereby billions of rupees are collected under the head of WHT from cellular subscribers, even those poor people of Pakistan who do not fall under the tax net and unfortunately the FBR has still no mechanism in place to deal with the situation.

“FBR has failed to provide relief to the common man”, said the committee members.

The FBR said that legislation is required to grant such kind of exemption to the consumers having income below taxable limit. In the upcoming budget, such proposals will be tabled.

The committee in last meeting had recommended FBR to establish a mechanism for connectivity with the servers of the mobile phone operators for monitoring of withholding taxes.

About the status on the online withholding data sharing by telecom companies, FBR officials said that FBR/PRAL has developed the utility which allows Telcos to upload withholding data file on agreed format on both FTP and HTTP based Web service.

FBR/PRAL has also finished the task of data reading and populating the relevant data repository at FRB’s end. FBR/PRAL has communicated to all Telcos the process of uploading withholding data files, they added.

A meeting was held in LTU Islamabad on 13th February, 2017 for the enforcement of above process and Telcos agreed to upload their data. So far all Telcos have not uploaded withholding tax data.

Even these Telcos such as Mobilink, who have uploaded the data, haven’t done so in the required format. FBR and LTUs are in constant touch with the telcos for uploading of the data and communicating if the data uploaded is in incorrect format.

Once entire date is uploaded, Large Taxpayers Unit will analyze it and further action, if any, would be initiated. The committee gave three months time to FBR for finalizing the arrangement.