Government’s stance on the withholding tax seems uncertain and their clarifications half baked. With an aim to increase tax inflow to maintain their promise of paying off the circular debt, the govt is capturing at every existe possible. Initially the tax on petroleum items was brought up in the budget speech of which the Supreme Court took notice and had it removed. As a desperate attempt, the government focused their attention on the most lucrative sector of economy: telecommunications, and decided to extract more juice out of it.
What the govt is not able to realize is that improving the pressure on telecommunications industry and its subscribers is limited to have a damaging impact eventually. A recent example can be given of the increase in tax on mobile phones import by the FBR in April 2013. The consequences of tax execution could be seen soon afterwards when the mobile phones dropped from around 128 thousand devices to 70 thousand.
This will also adversely affect impact the 3G auction that the government is planning on carrying out this year. Levying such massive taxes on the industry will indicate the industry as unfavorable for traders and Foreign Direct Investment (FDI) in the industry which is already going in the negative direction may not be able to rise to the positive mark.
Withholding tax remained 10% for the past few years since it was decreased from 11.5% in 2011 by the last govt. The net breakdown of taxes to be implemented from July 1, 2013 is as follows:
| Tax Head | Percentage | Receiver |
| Withholding Tax | 15 | Government |
| Federal Excise Duty | 19.5 | Government |
| Service Charges | 7 | Cellular Operator |
| Total | 41.5 |
| Card Load | Tax Amount | Remaining Load |
| 10 | 4.15 | 5.85 |
| 50 | 20.75 | 29.25 |
| 100 | 41.5 | 58.5 |
| 500 | 207.5 | 292.5 |
| 1000 | 415 | 585 |
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