The current government of Pakistan has announced a new mini-budget for mobile tax in the National Assembly. The government has proposed a 10% to 15% advance tax on telecom services in the new budget. The mini-budget abolishes tax exemptions of Rs343 billion. Consequently, around 150 items will be taxed. Not only this but, users have to pay Rs3.9 more on every Rs100 recharge.
Mobile phone consumers already pay heavy pay taxes on telecommunication services. For prepaid users, most of the taxes are deducted when they recharge the prepaid cards. At present, consumers get Rs76.10 on an Rs100 recharge after tax deductions. However now, the available balance will be reduced to Rs72.20 after the increase in the advance tax rate.
Updated Mobile tax Consumers have to Pay After mini-budget
The government, at present, collects 10% or Rs9.10 in advance tax on every Rs100 prepaid card. From the remaining Rs87, Rs14.80 or 19.5% are deducted as General Sales Tax (GST).
An increase in the advance tax rate will result in a deduction of Rs13 instead of Rs 9.10. However, the GST will stay at Rs14.80.
The mini-budget, additionally, proposes to increase the sales tax rate on calls from 10% to 15%. No doubt, the increase in the advance tax will make telecom services and the internet more expensive in Pakistan.
Mobile phone users will now get Rs 72.20 on every Rs100 recharge
Although the advance tax can be adjusted, 98% of the 187 million telecom service users in Pakistan are prepaid subscribers who belong to the low-income segment and this segment does not file returns. Hence, they cannot file for tax adjustment.
The federal government had reduced the withholding or advance tax from 12% to 10% in the previous budget. The government had promised to reduce withholding tax to 8% in the next budget, but instead of reducing the tax burden on mobile phone users, the government has increased it to meet revenue targets.