Government Increases Tax on Mobile Balance Recharge

The government has increased the tax on each mobile balance recharge, and telecom providers have been informing their customers that a 15% withholding tax would be charged on each recharge. 

According to Ministry of Finance sources, every balance recharge of a card costing Rs.100 is subject to an extra withholding tax of Rs. 4.2. Telecom firms have declared that they will pay an extra tax on balance recharges, and users will now receive a balance of Rs. 86.9 for a balance recharge of Rs.100. 

According to telecom sector sources, boosting WHT from 10% to 15% will generate income of over Rs 43 billion per year for the government. Only withholding tax and general sales tax are deducted by cellular mobile operators (CMOs) on pre-paid recharges and reloads. 

Furthermore, the PTA has previously imposed a limit of Rs. 0.15 per call for call setup expenses. 

When contacted, a PTA official stated that the PTA is vigilant about the rates and tariffs imposed by Cellular Mobile Operators (CMOs), and that any alleged incidence of charging beyond the declared tariffs and related taxes would be investigated in line with the law. 

With a five-percentage-point increase in advance tax on the telecom sector, the government reversed its revenue-raising decision. WHT was previously levied at a 10% rate on all telecom customers, regardless of their taxable obligations.