FBR Proposes an Increase in Tax on Mobile Cards

The Federal Board of Revenue (FBR) on the instructions of the International Monetary Fund (IMF) has proposed to enhance advance tax on mobile cards in the mini-budget.

Sources told ProPakistani that the tax department has proposed revenue measures such as enhancing advance tax on cellular services besides withdrawing the sales tax exemptions to a number of sectors including the pharmaceutical sector in the Finance Supplementary Bill 2021.

The tax department has also proposed to enhance advance tax on cellular services as per the summary shared with the Advisor to Finance and Revenue. Explaining this, sources said that FBR will charge withholding tax on every kind of mobile bill including card load as well as an advance loan if it is approved. The tax department is doing this because the court struck down the Federal Excise Duty on mobile calls, sources added.

FBR has proposed to curtail the exemption regime under Sixth Schedule including the pharmaceutical sector.

Sources said that FBR normally exempts the health, education, food sector from taxes but now it is imposing a 17% sales tax on the pharmaceutical sector under the normal regime on the direction of IMF. This could have a serious impact on middle and lower-middle-class people as prices of medicine have already increased in recent months, sources added.

Likewise, sales tax on import of high-end mobile phones in CBU condition under Ninth Schedule is proposed to be rationalized while the scope of Tier-1 retailers is also proposed to be rationalized. Under the Customs Act, 1969 the power of Collector to determine the value of imported or exported goods are proposed to be withdrawn which shall be exercised by Director Valuation that has been the case prior to Finance Act, 2021.

Explaining this, sources said that Customs collectors posted at Quetta missed the 25A section of Customs Act, 1969 and an inquiry against the senior officials of Customs is pending.

Similarly, the appeal against the decision of DG Valuation shall hereinafter be filed before judicial fora instead of Member Customs (Policy) in consonance with the principle of separation of judicial and executive functions. Moreover, in the interest of revenue, the corporate guarantee is proposed to be taken out as was the case before September 15, 2021.