Supreme Court of Pakistan in a surprising decision suspended the deduction of mobile phone taxes from the pre-paid mobile phone cards in the country. The cellular providers and the Federal Bearue of Revenue (FBR) have been given two days to act on the order.

Last month, the Chief Justice of Pakistan (CJP) Justice Saqib Nisar took sou moto notice of high level of taxes charged on the mobile phone cards in Pakistan and asked under which law Rs. 40 were being deducted as tax from Rs. 100 mobile phone cards.

The case was being heard by a three-member bench comprising Chief Justice of Pakistan Mian Saqib Nisar, Justice Ijazul Ahsan and Justice Umar Ata Bandial at the SC Lahore Registry.

The court observed that cellphone users were being looted due to the taxation measures placed on mobile phone cards. Justice Ahsan asked Chairman FBR, “If someone doesn’t fall into the tax net, how can taxes be imposed on them?”

The FBR chief then explained that the collection of service charges from mobile phone users is the policy of the telecom companies.

Chief Justice Mian Saqib Nisar remarked that only people whose cell phone usage crosses certain limits should be taxed.

Breakdown of Telecom Taxes

Every time a telecom user loads Rs. 100 card, he or she pays 19.5 percent federal excise duty, 12.5 percent withholding tax, and 10 percent service charges irrespective of the fact whether they fall under the taxable bracket or not.

The mobile phone user only gets airtime for Rs. 66.5 after tax deduction on every Rs. 100 mobile phone card.