Top court bars cellular cos to stop charging additional taxes from users

 

“The mobile phone users will now be getting Rs 88.89

instead of 76.94 on the top-up of Rs100. This means that a relief of Rs 11.95 has been given to the users from the apex court. The SC, however, stated that the telecom companies were not allowed to impose any service/maintenance charge”

 

 

Nisar had taken a suo motu notice on public complaints that an unreasonable and high amount of tax/other charges were being deducted from the topping up balance through easyload and calling cards,

besides taxing the calls

 

The Supreme Court of Pakistan has barred cellular companies from charging additional taxes. The mobile phone users will now be getting Rs 88.89 instead of 76.94 on the top-up of Rs100. This means that a relief of Rs 11.95 has been given to the users from the apex court. The SC, however, stated that the telecom companies were not allowed to impose any service/maintenance charge.

The order read: “The order dated 11th June, 2018 did not record reasons nor did it determine that the imposition of the taxes was without jurisdiction. We are also not persuaded to hold that the taxes were imposed without requisite legislation or that the six statutes contravened the Constitution.”

The order said the recovery of the taxes may therefore be resumed, adding: “However, the cellular telecom companies are not allowed to impose any service/maintenance charge thereon as they have elected not to impose these charges.”

Before suspension, on each calling card of Rs100, withholding tax (income tax) of 12.5 per cent was deducted under Section 236 of the Income Tax Ordinance 2001 by the Federal Board of Revenue (FBR), whereas 17pc excise duty was charged from the users in Islamabad Capital Territory. The provinces were charging 19.5pc sales tax on services from the users. In addition, cellular companies were deducting 10pc for the services rendered by them.

Thus when a card of Rs100 was purchased or easy load top-up was procured, Rs25 was deducted immediately and the mobile phone subscriber received around Rs75 in his/her account. And when the subscriber made a call, the call charges plus FED or the provincial sales tax were deducted from the value of services consumed by the subscriber.

Last year, the then chief justice Nisar had taken a suo motu notice on public complaints that an unreasonable and high amount of tax/other charges were being deducted from the topping up balance through easy load and calling cards, besides taxing the calls.

Justice Nisar had asked whether deduction of Rs40 on every scratch card of Rs100 was not exploitation and observed that the matter involved public interest.

Former CJP Saqib Nisar had questioned how a person who doesn’t fall within tax net is made to pay taxes on mobile phone top-up. Tax should be levied from a person whose cell phone use exceeds the fixed limit, he added.

During one of the hearings, the court was told that the state had suffered a loss of about Rs90 billion since the issuance of the suspension order.

In April this year, the apex court restored deduction of withholding tax and sales tax on pre-paid cellular scratch cards by vacating the earlier suspension order.

Meanwhile, some cellular companies have increased the call and SMS rates from July 15, 2019 and in this respect the subscribers have received SMS. At present, 161.183 million active users are in Pakistan and numbers are growing day-by-day.

The number of smartphones users is increasing in Pakistan due to the large influx of Chinese smartphones brands in the country. According to the latest statistical data by PTA’s telecom indicators, the number of mobile phone users in Pakistan has reached 161.183 million.

Moreover, the provision of 4G/LTE services in remote areas of Pakistan has also made a significant increase in overall 3G/4G subscribers, as the number of 3G and 4G users in Pakistan reached 68.07 million in May 2019. With an increase of 0.173 million users in just a month, it has become evident that 4G users in Pakistan are increasing with rapid pace and will soon take over the 3G market after the launch of 5G services.