Telecom sector excluded from electricity tariff relief, raises concerns over policy inconsistencies

Telecom companies have expressed frustration over their exclusion from the government’s recently announced electricity tariff relief, despite being granted industry status in 2004, as Prime Minister Shehbaz Sharif unveiled a Rs7.41 per unit reduction for domestic consumers and Rs7.69 per unit for industries, leaving the telecom sector disappointed by its omission from the relief package.

The companies argue that their long-standing denial of industrial status benefits continues to hinder their ability to reduce operational costs.

Talking to media, Kamal Ahmed, Secretary General of the Telecom Operators Association (TOA), stated, “The telecom sector was granted industry status in 2004, yet we continue to be denied the corresponding benefits.” 

He emphasised that the lack of tariff reductions for key telecom infrastructure, such as cell towers and data centers, is a major cost burden. “Industrial electricity tariffs would significantly ease our operational costs,” he added.

Telecom companies have also raised issues with the current tax regime, urging the government to exempt them from withholding tax obligations under the Income Tax Ordinance (ITO) 2001. 

According to the TOA, the current system increases compliance costs and stifles industry growth. The sector has also called for the reversal of a change made under the Finance Act 2015, which imposed a fixed minimum tax of 4% on telecom companies instead of allowing for tax based on actual earnings.

Additionally, the TOA has urged the government to stop coercive tax enforcement measures, such as freezing bank accounts and sealing offices, which they believe should only apply to habitual defaulters. The association also emphasized the need for a more equitable tax structure that supports growth rather than imposing arbitrary fixed rates.

As the federal government prepares the fiscal year 2025-26 budget, the telecom industry is pushing for urgent reforms to address the growing financial and regulatory challenges it faces. 

These include targeted tax relief for telecom employees, who are increasingly burdened by rising taxes and inflation, making it harder to retain skilled talent in the sector.

The TOA also advocates for a reduction in income tax under Section 236 and the rollback of the Federal Excise Duty (FED) rate from 19.5% to 16%. 

“Lowering these rates would support digital growth and long-term economic inclusion, without reducing government revenue,” said Kamal Ahmed.