Pakistan Imposes 5% Additional Tax on Telecom Services

PML(N) newly government increased tax on mobile phone, by 5 percent from July 1st, 2013. This tax will hurt 72.1 percent population of the country. With this increased on Rs. 100 you pay Rs 34.5 in tax. On Friday morning Mr. Ishaq Dar, Federal Finance Minister announce in National Assembly that all telecom users will now have to pay 15 percent withholding tax, which was previously settled at 10 percent for last many years. Mr. Dar said that proposal has been incorporated into the finance bill after consultation with the concerned stakeholders. Mr. Dar, in his briefing said that this increase in tax can be reimbursed to the customers as it is adjustable in the yearly financial assessment of the individuals. But the question is common people using prepaid mobile phones services how they claim adjustment. Taxes burden on Telecom Sector Telecom sector already heavily taxed and all this tax burden on common men pocket. Mobile phone users are paying 19.5 percent federal excise duty and now they have to pay 15 percent with holding tax and total sum of all these taxes now goes up to 34.5 percent. Meaning this that if you load Rs.100 balance you pay Rupees 34 and pasa 50 in term of tax. Customer will be left with Rs. 78 of credit for airtime usage. Out of Rs. 78, another 19.5 percent of FED is also deducted. Telecom sector is heavily tax industry in Pakistan and single largest contributor to exchequer. Last fiscal year telecom companies paid Rs.133 billion tax to government. In addition to these government taxes, every cellular operator in the country deducts 7 percent service charges as well. Hence, a customer will have to pay Rs. 41.5 out of Rs. 100 in the name of taxes and service charges. This explains that how government is getting greedy about collecting taxes from telecom users. Analysts believe that the move is not well thought of, as taxing the most taxed sector can fire back and may hit the annual collections made through taxing the telecom sector. dir="ltr" style="text-align: left;" trbidi="on">