Pakistan Telecommunications Authority (PTA) in its annual report has stated that the 12.5 percent withholding tax on mobile recharge is high as the majority of the cellular subscribers don’t fall into the taxable bracket and thus cannot get their paid amounted adjusted in the tax returns.
This year, the federal excise duty was decreased from 17 percent to 18.5 percent but the rates imposed by the provincial revenue departments are still very high. The report suggests that these rates should be reduced following the example of the federal budget of 2017-18.
The government reduced the withholding tax from 14.5 percent to 12.5 percent earlier this year but even then this rate is too high for the Pakistani consumer which is being taxed unfairly.
In the 50 page report, PTA apart from talking about the withholding tax on mobile recharge, also talked about high taxes on the import of mobile phones which comes between the penetration of cellular service across the country.
In the federal budget, the government actively deceived the mobile phone users by announcing a small relief given on budget phones whereas in reality heavy taxes were imposed on the devices.
Since then, FBR has imposed more regulatory duties on mobile phones opening a big opportunity for the grey importers in the country.
The authority has however claimed to recognize the industry problems which it will solve in the coming two years.