Withholding tax rate on telephone cards

KARACHI: The decision of Supreme Court of Pakistan has paved way for Federal Board of Revenue (FBR) to collect withholding tax on telephone usages under Section 236 of Income Tax Ordinance, 2001.

The apex court on Wednesday restored taxes on pay cards to use mobile phone services. The court suspended the levy of taxes on phones in June 2018.

Following are the applicable withholding tax rates on phone usages updated after Finance Supplementary (Second Amendment) Act, 2019:

a. Telephone subscribers and internet will pay zero tax on monthly bill up to Rs1,000.

However, Telephone subscribers and internet will pay 10 percent withholding tax on monthly bill up exceeding Rs1,000.

b. In the case of subscriber of internet, mobile telephone and prepaid internet or telephone card, the FBR will collect 12.50 percent of the amount of bill or sales price of internet pre-paid card of pre-paid telephone card or sale of unit through any electronic medium or what ever form.

The tax will be collected by person preparing telephone / Internet bill or issuing / selling prepared card for mobile phones / Internet from:

— Telephone Subscribers, Internet subscriber, purchaser of Internet Prepaid Cards,

— Telephone subscriber and purchaser of prepaid telephone cards

Along with payment of telephone bill or at the time of issuance of or sales of prepared cards.

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