Section 236 of the Income Tax Ordinance requires advance tax collection on mobile phone bills, prepaid cards, internet bills and electronically purchased units, with exemptions for specified categories.
The Federal Board of Revenue (FBR) has outlined advance income tax collection rules for telephone and internet users in Pakistan during Tax Year 2027, covering July 1, 2026, to June 30, 2027.
According to the Income Tax Ordinance 2001, updated up to June 30, 2026, Section 236 requires advance tax collection on various telecommunications and internet services at rates specified in Division V of Part IV of the First Schedule.
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Which telephone and internet services attract advance tax?
Under Section 236, advance tax applies to the following transactions:
• Telephone bills charged to subscribers.
• Prepaid telephone cards.
• Purchase of telephone units through electronic platforms or any other means.
• Internet bills charged to subscribers.
• Prepaid internet cards.
Telecommunications and internet service providers must collect advance tax alongside regular billing charges.
Similarly, sellers and issuers of prepaid telephone or internet cards must collect the applicable tax from purchasers when cards are issued or sold.
The provision also requires advance tax collection when telephone or internet units are purchased through electronic platforms or other means.
Who is exempt from advance tax?
The FBR has specified that advance tax under Section 236 will not be collected from the government, foreign diplomats and diplomatic missions in Pakistan.
Individuals who provide a certificate issued by the Commissioner Inland Revenue confirming that their income is exempt from tax during the relevant tax year are also exempt.
Advance tax calculation for 2027
The applicable collection rates are prescribed in Division V of Part IV of the First Schedule to the Income Tax Ordinance.
The tax is collected at the time of billing, prepaid card purchases or issuance of electronic units, depending on the transaction.
The provisions apply throughout Tax Year 2027.
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