Thursday Jun 14 2018

Taxes collected on prepaid mobile phone cards suspended for 15 days

Photo; File 

KARACHI: Tax authorities have suspended all taxes collected on prepaid scratch cards following the directives of Supreme Court.

Following the suspension, no tax would be cut when a prepaid scratch card is recharged from midnight on Thursday and consumers will get 100 per cent credit for the next 15 days.

The apex court has directed the Federal Board Revenue (FBR) to present a report on the revenue impact of the suspension in tax collection after the 15-day period.

Due to the suspension of taxes on prepaid mobile phone cards, cellular service providers will not get Rs1.45 billion under the service charges.

On the other hand, FBR will lose out on getting Rs2 billion while provinces will not receive Rs2.91 billion in sales taxes during the 15-day suspension. 

Sources in FBR said Rs120 billion in taxes are collected from prepaid card upload in mobile phones. Out of the amount, FBR gets 12.5 percent of the share while each province gets 19.5 percent in terms of sales tax.  

On Monday, the Supreme Court had ordered a suspension in deduction of taxes on prepaid scratch cards.

Chief Justice of Pakistan Justice Saqib Nisar had ordered the suspension while heading a three-judge bench hearing a suo motu case regarding an increase in taxes on prepaid cards at the top court’s Lahore Registry.

“Taxes should be taken from users whose mobile phone usage is above the set limit,” Justice Nisar had remarked during the hearing.

He had further directed authorities to draft a comprehensive policy regarding deduction of taxes on mobile phone usage.

Previously, customers would receive Rs64.28 on the recharge of Rs100 prepaid card, after deduction of federal excise duty, income tax and sales tax.

According to sources, cellular services providers would receive Rs35 billion annually by charge 10% taxes on every prepaid card upload in mobile phones.