12.5pc withholding tax on mobile recharge is still exorbitant, says: PTA

Telecom sector contributed around Rs161.43 billion in FY 2016-17 compared to Rs126.46 billion in FY 2014-15

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ISLAMABAD: Pakistan Telecommunication Authority (PTA) in its annual report claimed withholding tax rate of 12.5pc was exorbitantly high since most of the users didn’t fall under the tax net.

The report read the amount paid under withholding tax cannot be refunded in such people’s annual tax returns. For financial year 2017-18, federal excise duty on mobile balance recharge has been lessened to 17pc from 18.5pc reported Dawn.

On the contrary, tax rates for provincial revenues department remain high and should be lessened in line with the federal budget, read the report. PTA report also mentioned “High customs duty and other taxes on the import of mobile handsets and telecom equipment also impede the mobile phone service penetration.”

The telecom sector is said to have contributed around Rs161.43 billion in FY 2016-17 compared to Rs126.46 billion in FY 2014-15. PTA said challenges in respect to harmonization of federal and provincial tax laws remains important to resolve the sales tax collection issues.

Pakistan’s 3G/4G subscribers rose from 13.5 million in FY 2014-15 to 42.1 million by end of FY 2016-17, representing a 68pc increase. Cellular mobile subscribers rose to 139.76 million by end of FY 2016-17 against 114.66 million in FY 2014-15.

After PTA and telecom companies reached a consensus, withholding tax rates were dropped to 12.5pc for 2017-18 compared against 14pc, although the report stated the current rate was still very high.

Telecom regulator declared it knew the industry problems and planned to resolve them within the next two years, which will assist in bringing major innovation to the sector.

Ex-Chairman PTA Dr Ismail Shah remarked over 87pc population has access to cellular signal, from which 70pc had 3G services and 30pc can access 4G/LTE services.

PTA’s report highlighted the excitement surrounding 3G/4G services which heralded in improvement of service delivery. Telecom companies say smartphone penetration is only 30pc and around 50 million people still don’t have access to mobile phones.

They demanded for tax reductions on mobile cellular services and been urging the government to decrease prices of mobile phones.

 

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