Islamabad, September 4, 2025 – The Federal Board of Revenue (FBR) has officially notified the advance tax rates applicable on the use of telephone and internet services during the tax year 2025-26.
The notification was issued through the updated Withholding Tax Card 2025, which incorporates all amendments made to the Income Tax Ordinance, 2001 under the Finance Act, 2025.
According to Section 236 of the Income Tax Ordinance, the government is empowered to levy advance tax on telephone and internet usage. The provision outlines clear rules for both subscribers and prepaid service users, ensuring a uniform mechanism for tax collection.
For fixed-line telephone subscribers (excluding mobile phones), if the monthly bill exceeds Rs. 1,000, the applicable tax rate will be 10 percent on the portion of the bill above that threshold. In the case of internet and mobile telephone services, as well as prepaid telephone or internet cards, a higher tax rate of 15 percent will apply on the total bill amount or the sale price of the prepaid card or electronic units.
The law further specifies the responsibilities of service providers. The company or authority issuing telephone or internet bills will be required to charge and collect the advance tax in the same manner as they charge the service fee. Similarly, entities selling prepaid telephone or internet cards, or issuing units through any electronic medium, must collect the tax from customers at the point of sale.
However, Section 236 also provides exemptions. Advance tax will not be collected from government departments, foreign diplomats, diplomatic missions in Pakistan, or individuals who can produce a certificate from the Commissioner confirming that their income is exempt from taxation.
The FBR emphasized that these measures are aimed at widening the tax net by targeting consumption-based transactions such as telephone and internet services. By doing so, the government seeks to enhance revenue collection while ensuring that the burden is spread fairly among users of communication and digital services.
Disclaimer: The above information is based on notifications issued by the Federal Board of Revenue (FBR) for the tax year 2025-26. It is provided for general informational purposes only and should not be considered as legal or financial advice. Users of telephone and internet services are advised to consult with tax professionals or refer directly to official FBR publications for specific guidance related to their individual circumstances.