5% Additional Tax on Telecom Services said by Ishaq Dar

Posted By Ismail Ziker on Jun 24, 2013 | 0 comments

Pakistan has declared to enhance the tax rate on telecom services, a industry that is leading the taxed list, by 5 % from 1st July , 2013.

According to Mr. Ishaq Dar, the Finance Minister, all telecommunications users will now have to pay 15 % withholding tax, which was formerly resolved at 10 % for last many years. Mr. Dar said that offer has been integrated into the finance bill after evaluation with the involved stakeholders.

Mr. Dar, in his briefing to National Assembly these days, said that this improve in tax can be refunded to the customers as it is flexible in the annually financial assessment of the people.

List of Taxes on Cellular Services

After this increase in WHT, taxes on cellular services are as following:

• WHT: 15 percent
• FED: 19.5 percent
• Total: 34.5 percent

In addition to these government taxes, every cellular operator in the country deducts 7 percent service charges as well.

42% of Load Goes in Taxes and Charges

A customer loading Rs. 100 card will be taxed as following:

• Initial Load: Rs. 100
• Remaining amount after WHT (15 percent): Rs. 85
• Remaining amount after Cellular Charges (7 percent): Rs. 78

After loading a Rs. 100 card, a 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

• Remaining Amount After FED Collection (19.5 Percent): 58.5

Hence, a customer will have to pay Rs. 41.5 out of Rs. 100 in the name of taxation nd service charges. This describes that how govt is getting selfish about gathering taxes from telecommunications customers.

Analysts believe that the move is not well believed of, as challenging the most subject to taxes industry can fireback and may hit the yearly selections created through challenging the telecommunications industry.