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SC bars cellular companies from levying additional taxes

SC bars cellular companies from levying additional taxes

ISLAMABAD: The Supreme Court of Pakistan has ordered all cellular companies to remove additional taxes imposed on postpaid connections.

A three-member bench of the apex court headed by Chief Justice of Pakistan (CJP) Mian Saqib Nisar heard the case on Tuesday wherein Advocate General Ahmad Awais told the court that the Punjab government was incurring a loss of Rs2 billion per month due to the additional charges.

On the occasion, the Sindh advocate general informed the bench that the provincial government was also incurring a loss of Rs1 billion per month.

“If you stop charging commission, these losses can be reduced,” remarked Chief Justice Nisar and advised the provinces to curb corruption.

Further, the top judge criticised the excessive service charges billed to the postpaid consumers.

“If you buy Rs100 worth of credit, Rs25 are deducted. What are these service charges?” the top judge wondered.

The tax deducted on each call is received by the national exchequer, however, Rs25, deducted as service charges, are not given to the board, said the Federal Board of Revenue’s (FBR) legal representative.

The federal and provincial governments requested the court to grant some time to submit their responses.

The CJP  remarked that the court will hear the case later and adjourned the hearing on additional taxes on mobile phone cards and easy loads till six months.

Statistically, current taxes charged on postpaid subscriptions include a withholding tax of 12.5% and General Sales Tax (GST) at either 17.5% or 18.5%.

Back in June, the Supreme Court removed taxes and administrative charges of mobile phone companies for prepaid users.

The apex court had asked the FBR earlier to find a way to tax mobile phone customers in a manner so that only those under the tax net have to pay the taxes.

With the suspension of withholding taxes on prepaid services, the federal govt is losing around Rs. 120 million per day. The provincial governments are losing Rs. 160 million (combined) because of the suspension of GST on mobile services.