Despite numerous complaints from telecom operators, the Federal Board of Revenue (FBR) is considering a new tax to add to the pile. The board is considering to increase the 0.4% tax applied to banking transactions on mobile banking services (for non-filers of tax returns) in the upcoming budget.
They will, however, remove the tax on cash withdrawals by branchless banking agents.
Currently, they are paying 12% tax on commission earned from banks as well as 0.3% tax on cash withdrawals.
Contrary to SBP’s Intentions
State Bank of Pakistan suggested the removal of tax on cash withdrawals for branchless banking agents. The Bank is following the “National Financial Inclusion Strategy” which is why they put the recommendation forward in the first place. SBP believes that taxes on cash withdrawals could be a potential barrier towards expanding the banking services to more than half of the Pakistani population by 2020.
Over Rs. 110 million has been paid as withholding taxes by the banking agents.
FBR’s idea to add mobile banking services into the 0.4% withholding tax net goes in the opposite direction to the goals set in the National Financial Inclusion Strategy put forward by SBP. The government implemented the tax on all banking transaction to broaden the tax net but failed to achieve that goal.
Lion’s Share of Taxation Revenue
The telecoms industry paid Rs. 158 billion as taxes in FY 2015-2016. This was 34.7% of the total tax (Rs. 455 billion) in the same fiscal year. The Telcos have sought to reduce the withholding tax from 14% to 10% for the next financial year 2017-2018. However, it’s unlikely that FBR will accept this proposal as this would mean roughly Rs. 50 billion in lost revenues for them.
The Board charges 14% withholding tax for both prepaid and postpaid consumers even though most of the pre-paid customers are below the taxable income threshold of Rs. 400,000 per year. FBR might, however, come up with a method of excluding the untaxable customers.
It should be noted that telco subscribers pay the most taxes compared with customers in other sectors. They can’t reclaim the withholding tax either as they don’t file tax returns.
Demands By Telcos
Industry players have tried to get the government to reduce federal excise duty (FED) and general sales tax (GST) from 19% to the standard 17%. In addition, they have also demanded the removal of FED and GST on SIM cards, IMEI number activation, and data.
None of these demands have been met or will be met for the foreseeable future as the FBR considers it a mere wish list.
Soon we will have a WHT on every time you take a shit! LOL
Its already applicable on toilets at public places. 10 Rs. WHT per visit.
It be ironic don’t you think, considering the name WITHHOLDING.
Do you have any idea what segment of the society uses branchless banking? Do you think they can ever complete the paperwork required for filing a tax return? Have you ever filed a return yourself? Do you think your helper or driver or maid at home can EVER complete tax return process? If the answer is yes then your concern is pretty stupid I’m afraid.
Meanwhile India is giving major tax reliefs and even subsidizing financial institutions for enabling mobile banking. This is what happens when policy makers are semi educated.
Well done, FBR. It is the need of the hour to implement differential rates of withholding taxes on all tax evaders. 0.4% has proven to be a great success for FBR. Inspectors should be deputed to market places for monitoring of tax evaders.
FBR Filer ki List to Show Kare & Non Filer Ki List Bhi Show Kare :
Jab tak Media Pe Name with CNIC Nahi Ayega Log Khud Ko Kabhi Filer Nahi Karwayengy
Bharrway, tjhy pta bhi hy k filer hota kya hy?
Filer doesn’t mean that person is paying taxes, its more like a statement of someone’s worth
Yea, another reason for people to run away from technology.
Panama ka Sherrrrr
Mian Jahil Nawaz and Munshi Dar What a shame
I an an overseas and i recently transferred 20 lakh from Faysal bank to JSBL and they charge me 8000 rs and when i got the same money from my brother last year and he paid 8000 rs too so so far i paid 20000 rs fro transferring 20 lakh. This the worse country in the world.
Shukar karo bhai fbr nay yeh nahi bola pehlay batao kay paysa aya kahan say phir milay ga xd
8000+8000= 16000 rs hotay hain.
baaqi k 4 hazaar ks ko day diay bhai? Aur same money ko rotate krne ki zaroorat kyun par gae bhai?
Withholding tax is adjustable against your tax liabilities at the end of the year when filing your taxes. Similarly if your employer allows, some of these can be adjusted directly by your employer before even paying your due taxes. As name suggests, the amount is withheld and adjustable against final tax liability.
Tax filers don’t get charged any withholding tax on transfer of money within their own accounts. It is only charged by the receiving party if they’re not a tax payer. Further this amount is adjustable end of the year against your liabilities.
Governments are forced to charger higher taxes or on more transactions only because of the majority of the country not paying taxes. Self assess your mistakes prior to criticizing.
Sorry if this message is found offending to a few but that’s the simple truth.
Tax (or so called fee) already implemented to withdraw our own cash from mobile account. If FBR want to implement WHT then people like me will close our mobile banking accounts. We don’t have huge business, we are salaried persons and tax cannot be implemented on us because the yearly income is not so heavy that we can pay tax (that’s other thing that we already paying taxes on all items we use or purchase).
I already reduce the use of my mobile banking account because of fee of withdraw of cash. If more tax will implement then I will close my mobile banking account because I cannot pay taxes like this.
In other countries even poor countries facilitates their people to use new technology in their life so they can get benefits from it but here in Pakistan they put more taxes so people runaway from them and couldn’t use any facility in their life.