tax-exemtion-for-mobile-users

The mobile phone has become a necessity not a luxury in today’s world. The increasing number of mobile phone users made the telecom sector vulnerable to the authorities. If we talk about Pakistan, the mobile phone users suffer a never-ending punishment of paying hefty taxes to the government.

But it seems that sound of poor is being heard in the upper houses of the government as the Senate Standing Committee on Information Technology and Telecommunications recommended the authorities not to deduct Withholding Tax (WHT) on using Rs. 500 or less in a month. The committee thinks that these cards are mostly used by people who do not come under tax net.

The committee met on Monday with Senator Shahi Syed in the chair to review the progress made so far on devising mechanism/policy by the Federal Board of Revenue (FBR) and the Pakistan Telecommunication Authority (PTA) regarding collection of General Sales Tax and Withholding Tax from cellular operators.

The meeting was attended by Senators Syed Shibli Faraz, Taj Muhammad Afridi, Dr. Ghous Muhammad Khan, Secretary Ministry of IT and Telecommunications and other senior officials.

The committee also recommended FATA and Gilgit-Baltistan to be exempted from WHT. The committee observed that it is a matter of legislation and needs to be taken on the appropriate forum i.e. the Parliament.

In response, FBR officials told the committee that as per budget proposals a certain limit may be proposed for deduction of WHT from poor people. The official further stated that the FBR collects around Rs. 1 billion per week and around Rs. 48 billion per annum as WHT from mobile consumers. However, committee reiterated that only a small number of people could claim WHT due to complex tax system in the country.

Senator Shahi Syed said that figures of FBR do not seem justified as there are around 135 million mobile users in the country and with an average Rs 200 is being used by each accounting for Rs 810 billion. In case of 10 percent service tax, the amount will be Rs 81 billion and 18 percent GST it would reach Rs 113 billion. He said that FBR should have a figure of Rs 113 billion of taxes instead of Rs 48 billion.

In most of the cases, the revenue is being generated from tho people who do not fall into the taxable bracket. This new recommendation, if accepted, will bring a peace of mind to many mobile phone users.