Pakistan has announced to increase the tax rate on telecom services, a
sector that is topping the taxed list, by 5 percent from July 1st,
2013.
According to Mr. Ishaq Dar, the Finance Minister, all telecom users will now have to pay 15 percent withholding tax, which was previously settled at 10 percent for last many years. Mr. Dar said that proposal has been incorporated into the finance bill after consultation with the concerned stakeholders.
Mr. Dar, in his briefing to National Assembly today, said that this increase in tax can be reimbursed to the customers as it is adjustable in the yearly financial assessment of the individuals.
Analysts believe that the move is not well thought of, as taxing the most taxed sector can fireback and may hit the annual collections made through taxing the telecom sector.
According to Mr. Ishaq Dar, the Finance Minister, all telecom users will now have to pay 15 percent withholding tax, which was previously settled at 10 percent for last many years. Mr. Dar said that proposal has been incorporated into the finance bill after consultation with the concerned stakeholders.
Mr. Dar, in his briefing to National Assembly today, said that this increase in tax can be reimbursed to the customers as it is adjustable in the yearly financial assessment of the individuals.
List of Taxes on Cellular Services
After this increase in WHT, taxes on cellular services are as following:- WHT: 15 percent
- FED: 19.5 percent
- Total: 34.5 percent
42% of Load Goes in Taxes and Charges
A customer loading Rs. 100 card will be taxed as following:- Initial Load: Rs. 100
- Remaining amount after WHT (15 percent): Rs. 85
- Remaining amount after Cellular Charges (7 percent): Rs. 78
- Remaining Amount After FED Collection (19.5 Percent): 58.5
Analysts believe that the move is not well thought of, as taxing the most taxed sector can fireback and may hit the annual collections made through taxing the telecom sector.
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