Supreme Court Removes Additional Charges on Postpaid Connections

The Supreme Court is removing additional charges on postpaid subscriptions, that are being paid to cellular companies in Pakistan.

Current taxes charged on postpaid subscriptions include a withholding tax of 12.5% and General Sales Tax (GST) at either 17.5% or 18.5%.

Unjustified Service Charges

During a hearing, Chief Justice Pakistan discussed cellular service rates and the amount of tax paid on each subscription payment, saying that the incremental costs (Rs. 25 on a Rs. 100 recharge) paid on each recharge don’t exactly go to the FBR.

They are deducted as “service charges”, which according to the Chief Justice says are “not justified”. As for taxation, the government already receives tax when you make a call, so there’s no need for an additional deduction when paying for a balance recharge, responded an FBR lawyer.

The Verdict

Finally, the Supreme Court ordered the FBR to come up with a way to rightfully tax mobile users, so that only the people who are eligible to pay tax have to bear additional charges. Until the FBR comes up with something feasible, the postpaid taxes are likely to remain abolished.

Back in June, the Supreme Court removed taxes and administrative charges of mobile phone companies on prepaid users.

The Apex had asked the FBR earlier to find a way to tax mobile phone customers in a manner so that only those under the tax net have to pay the taxes.

Until such a method is developed, mobile taxes are likely to be suspended.

With the suspension of withholding taxes on prepaid services, the federal govt is losing around Rs. 120 million per day. The provincial governments are losing Rs. 160 million (combined) because of the suspension of GST on mobile services.

Removal of tax charged from postpaid consumers will further increase lost tax revenue.

This is a developing story, we’ll update it as more information becomes available.

  • Dear Mr. Chief Justice, when you will get notice of Surcharge, Additional Surcharge etc. etc. of electricity bills?

  • Would anyone notice and highlight the issue that though Government is barred from receiving taxes, the common man is still paying almost the same amount.
    Actually the telecom companies are making their profits 20% more. At least this holds true for my case being a Zong user.

    Package — Before Tax Removal —After tax removal
    Zong 20 —- 55 paisa / 20sec ——- 70 paisa / 20 sec from August 2018
    Monthly 500—–Rs. 500 recharge inclusive of all taxes —–Rs. 500 without any taxes
    Voice 100 Bundle —-Rs.100 for 80 offnet minutes —— Rs. 120 for 80 offnet minutes
    Voice 500 Bundle —-Rs. 500 for 425 offnet minutes —-Rs. 600 for 425 offnet minutes

    and so on.

    so, what we can see is they have increased the prices by at least 20% without any improvement in services and when FBR will awake to design new tax model, it will surely be added on top of it.

    • Valid point! Rates have been increased and now that extra tax amount is bring deposited in cellular company coffers to be declared as their profit later on.

    • Well I would say that Zong is just being honest that they were using that as their service charge. If you read carefully, the article sites just that; those charges are not necessarily going to FBR and even some telcos are marking them as “service charges” instead of tax.

      For me though, this ruling has been a pure blessing. My warid/mobilink postpaid bill has seen taxes turn 0 and no increases whatsoever. So am happy.

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