Increase in withholding tax will also make telecom services and internet more expensive for 187 million telecom service users in Pakistan out of which 98 per cent are pre-paid customers
KARACHI: The federal government is mulling to reverse its all decision of reducing taxes on Telecom Sector. It is going to raise withholding tax from 10 per cent to 19 per cent once again in mini budget to be announced soon.
After coming into a trap of International Monetary Fund (IMF), the federal government has finally decided to withdraw all tax incentives on different sectors including Telecom industry, the sources in a telecom companies told Treasure Magazine here on Tuesday.
The federal government is considering raising at least five per cent withholding tax rate on Telecom services, the source claimed.
The source said that the current tax on a Rs 100 pre-paid card is advance tax @ 10% (9.1), Sales Tax @ 19.5 (14.8), means the consumer on pre-paid card receives only Rs 76.1 balance. If the government raises Advance Tax @ 15% (13) sales tax @19.5 (14.8), means the consumer on Rs 100 pre-paid card will receive only Rs 72.8 as balance on his mobile.
The telecom official said, “Increase in withholding tax will also make telecom services and internet more expensive for 187 million telecom users in Pakistan out of which 98 per cent are pre-paid customers, the sources claimed.
Consumers belonging to the lower income group cannot even adjust the withholding tax, the source claimed. The federal government had reduced the holding tax from 12% to 10% in the 2020 budget but now through a mini budget, the government is mulling to enhance it to 19 per cent.
The source said that the government had promised the telecom sector to reduce the withholding tax by 8 per cent, but now it is going to reverse its all decisions.
Already, Pakistan is one of the countries where the consumers are paying high tax rates on telecom services including on the internet data. Pakistan ranks second in South Asia in terms of tax rates.