ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday said the advance income tax on cellular services has been increased to 15 per cent from 10 per cent.
The FBR issued Circular No. 12 of 2022 to explain amendments to Income Tax Ordinance, 2001 made through Finance (Supplementary) Act, 2022.
The increase in advance tax rate on cellular service would generate additional 4.5 billion for the FBR.
The changes in the withholding tax regime on usage of internet and mobile phones services were introduced through the Finance (Supplementary) Bill, 2021, which was later approved by the national assembly.
The FBR said that through the Finance Act, 2021 federal excise duty (FED) was levied on telecom services. However, telecom companies challenged the duty and got a favourable decision.
“A marginal increase in adjustable advance tax has been proposed from 10 per cent to 15 per cent to make up for revenue loss from telecos,” the FBR added.
The FBR collects the advance tax on telephone and internet users under Section 236 of Income Tax Ordinance, 2001.
According to the ordinance:
“Telephone and internet users.- (1) Advance tax at the rates specified in Division V Part IV of the First Schedule shall be collected on the amount of – (a) telephone bill of a subscriber; (b) prepaid cards for telephones; (c) sale of units through any electronic medium or whatever form ; and (d) internet bill of a subscriber; and (e) prepaid cards for internet.
(2) The person preparing the telephone or internet bill shall charge advance tax under sub-section (1) in the manner telephone or internet charges are charged.
(3) The person issuing or selling prepaid cards for telephones or the internet shall collect advance tax under sub-section (1) from the purchasers at the time of issuance or sale of cards.
(3A) The person issuing or selling units through any electronic medium or whatever form shall collect advance tax under sub-section (1) from the purchaser at the time of issuance of sale of units.
(4) Advance tax under this section shall not be collected from the Government, a foreign diplomat, a diplomatic mission in Pakistan, or a person who produces a certificate from the Commissioner that his income during the tax year is exempt from tax.”