Pakistan Telecommunication Authority (PTA) has released PTA annual report 2017. recently. It has stated in the report that Pakistan will emerge as the first nation in South Asia to introduce 5G internet services. The report also shed light on the Tax payed by telecom consumer. Govt. Collected Rs. 262 bn GST From Telecom Consumers in 5 Years.
From the last five years, Government has received Rs. 262 billion from telecom consumers in general sales tax and activation. The statistics revealed that overall spending of telecom and mobile services by consumers in Pakistan touched Rs. 2266.7 billion.
Govt. Collected Rs. 262 bn GST From Telecom Consumers in 5 Years
Telecom Industry including operators payed Rs. 808.16 billion in terms of taxes, regulatory fees, initial and annual license fees and activation taxes during the span of five years i.e 2012-2016.
Pakistan Telecommunication Authority released the latest data which revealed that Government of Pakistan has collected Rs. 632.12 billion in terms of GST and Withholding tax in five years.
PTA accepted in its annual report that WHT of 12.5 percent on every mobile recharge and tax rates by provincial revenue authorities is very high. Pakistan Telecom Authority also recommended that these high taxes should be reduced.
The PTA said harmonization of federal and provincial tax laws was important to resolve sales tax collection issues and avoid undue litigation between operators and the federation.
PTA also suggested to give industrial status to telecom sector so that mobile operators can adjust income tax paid at the time of import of telecom equipment.
Presently telecom consumers are charged 19.5 percent in from of GST and 12.5 in form of WHT. If we compare it with other sectors 16 percent GST and 10 WHT are charged.
Telecom sector is one of the highest tax paying sectors of Pakistan, as on every mobile recharge, consumers have to pay 14 percent of their charged amount in taxes.
Telecom companies have always demanded government to rationalize the telecom tax structure presenting five proposals to the government. These include:
- Eliminate WHT
- Rationalize federal excise duty (FED)/ GST
- Grrant of industrial status to telecom sector by FBR
- Eliminate advance income tax on auction price of 4G spectrum
- Eliminate SIM issuance and IMEI taxes
It is mentioned in PTA’s annual report that high customs duty and other taxes on the import of mobile handsets and telecom equipment, are the major hurdle in the mobile penetration. For the past few years rationalization of taxes in the telecom sector remained a major challenge, which was being faced by the industry.