With reference to taxes applied on the recharge prepaid balance, it is stated that Cellular Mobile Operators (CMOs) are deducting only Withholding tax and General Sales Tax on the prepaid recharge after the oration of taxes by the honourable Supreme Court of Pakistan from April 2019.
PTA Elaborates About Taxes on Prepaid Recharge and Other Call Tariffs for Providing Clarity to Mobile Subscribers
On the recharge of Rs. 200, the balance rendered to the user is Rs. 177.778 (and not Rs. 152 as reported on the social media) after deduction of Rs. 22.222 against withholding tax @ 12.5%.
GST @19.5% is applied on per call, SMS, data usage basis or opting for any additional bundle/package. When a user consumes its remaining balance of Rs. 177.778, a total of Rs. 29.01 as GST is charged. In the same way, if a package is priced at Rs. 167 (without GST), the same, requires a prepaid balance of Rs. 199.56 (Price + GST = Rs. 167 + Rs. 32.56). Due to the lack of clarity on the deduction of GST in addition to WHT, mobile subscribers are assuming that CMOs are charging well above applicable taxes, which is not correct.
Furthermore, PTA has fixed a ceiling on call setup charges @ Rs. 0.15 per call. PTA is vigilant about the rates/tariffs being charged by CMOs and action will be initiated on any reported incidence of charging above the published tariffs and applicable taxes in accordance with the law.