Chief Justice of Pakistan, Mian Saqib Nisar, today took sou moto notice of the exorbitant amount of taxes that customers pay for availing telecom services.
Chief Justice reportedly took notice of the roughly 40 percent tax that is applicable on mobile cards and wondered why and under which tax regime such high amount of taxes were being deducted by private cellular companies.
For those who don’t know, all cellular customers are charged flat 12.5 percent withholding tax as soon as a card is loaded.
Alongside — at the time of card loading — another 10 percent of amount is deducted by cellular companies under the head of service charges. Not to mention, Telcos have a different and separate name for these charges. For example, one company calls it a service charge, another calls it administrative fees while another telco calls the charge as maintenance fee.
After early deduction of around 22 percent, each and every transaction (call, voice, data or package) involves GST of 19.5 percent.
This leaves the customer with over 40 percent taxes on mobile cards, irrespective of its value.
Not to mention, such high taxes are charged across the board, even for the customers who don’t come under tax net, i.e. even if they earn less than taxable income.
Chief Justice, in today’s notice, has asked FBR and all local telecom operators for their viewpoint on the matter. Attorney General is also going to assist the court on Tuesday (next week) when the case will be heard in the Supreme Court of Pakistan.
It may be recalled that telecom sector is one of the highest taxed sectors in the country. The government, from very early days, has always relied heavily on telecom sector and it has actually started to negatively impact the growth of the sector.
It must be mentioned here that after a booming start from 2005 till 2009, the tax collection from telecom industry has become stagnant.
The industry has repeatedly called for the rationalization of telecom taxes but without any results.
We will have to see how this sou moto notice is going to pan out and if any tax relief will be given to the common man.