SC on Monday took a bold decision by suspending tax deduction on mobile recharge cards. Last month CJ Mian Saqib Nisar took notice of tax deducted recharge cards and by asking how 40% Tax rate is derived. A three-member bench of the SC heard the suo motu case at the Lahore Registry. The CJ observed that there should be a difference between those who pay their taxes and the evaders.
Justice Ijaz Ul Ahsan questioned Chairman Federal Board of Revenue, whether a person who does not fall in the tax net can be charged? On this, the FBR chief explained that collection of service charges from mobile phone users is the policy of telecom companies.At present, as per some reports, on the charge of a Rs100 pre-paid mobile card, a 19.5 percent Federal Excise Duty (FED) is charged along with 12.5 percent withholding tax and 10 percent service/maintenance charge.
This will surely support telecom consumers they will receive a good benefit of around 40% on card recharge on the other hand it will surely put a significant dent in tax collected by government. Pakistan is one of the major countries where usage of cell phone is very high and still growing, according to PTA cellular subscribers have crossed the mark of 150Million in Pakistan.