The government of Pakistan has collected Rs. 27.5 billion in withholding taxes from Pakistani telcos during the first seven months of the current fiscal year 2017-18.
The withholding tax has been reduced by 2% as compared to the Rs. 28.06 billion collected during the same period in the last fiscal year. This was mainly because of reduction in the withholding tax, where government according to Finance Act 2017 changed it from 14% to 12.5%.
Withholding tax collection for January 2018 increased by 47% to Rs. 3.8 billion as compared to Rs. 2.57 billion which was collected in the same month a year ago.
Pakistani telcos charge 12.5% withholding tax from consumers for using their pre-paid service whereas the post-paid users pay 10% withholding tax on a monthly basis if their bill exceeds Rs. 1000.
Many people are not aware of the fact that the tax collected by the Pakistani telcos can be adjusted when a person files for incomes tax and can claim refunds. The fact that majority of the telecoms subscribers do not fall under tax bracket makes it impossible for them to claim a refund which is a major injustice.
Pakistani telcos have been asking the government for rationalization of telecom taxes for quite some time and recently the Senate Committee directed FBR and cellular mobile operators to present the recommendations towards a more rationalized tax regime.