The contribution of telecom operators and consumers has been outstanding to various areas of the economy including tax revenue and non-tax revenue for the national kitty.
According to the State Bank of Pakistan, the telecom sectors contributed over Rs. 80 billion in the first quarter of the financial year 2019-20.
The government received a handsome amount of Rs. 70 billion from Telenor and Jazz as license fees. This is half of the license fee and the next tranche of taxes to the government is likely to boost revenues for the government’s pocket provided the legal cases are resolved in favor of the regulator or the government on the two-fold surge of license fee.
The amount has given a cushion to the government to meet its budgetary finance in the current financial year.
Under the withholding tax, the tax contribution made by users surged to Rs. 12.6 billion in the first quarter of 2020 compared to the previous quarter in which it stood at Rs. 1.9 billion.
During the last financial year, the government withdrew the withholding tax on the directives of the Supreme Court however a 12 percent tax was imposed again on recharging prepaid balance via cards.
Telecom operators said the wavier to the taxes and their charges have given impetus to the use of the cellular phone services, hence this relaxation should be retained. The taxes were reimposed but the various charges on telecom operators were removed permanently.
The consistent growth in the number of users and their utility services also enhanced the tax revenues of FBR on the account of withholding tax whereas the GST is collected by the provincial tax authorities separately.
The government is also getting taxes on the account of GST from mobile handsets imports in the current financial year.