ISLAMABAD: The collection of withholding tax from phone subscribers registered a phenomenal increase of 630 percent to Rs27 billion during first half of the current fiscal year, according to data made available to PkRevenue.com
The sources in Federal Board of Revenue (FBR) told that the restoration of withholding tax on phone usage by the Supreme Court of Pakistan (SBP) helped the tax authorities to generate substantial amount during the period under review.
The data revealed that the FBR collected withholding tax to the tune of Rs27 billion during first six months (July – December) 2019/2020 as compared with Rs3.7 billion collection in the corresponding period of the last fiscal year.
The FBR collects withholding tax on telephone usage under Section 236 of Income Tax Ordinance, 2001 from telephone subscribers and internet.
The tax rate is zero percent on monthly bill up to Rs1,000. However the bill exceeding Rs1,000 shall liable to tax rate at 10 percent.
In case subscriber of internet, mobile telephone and pre-paid internet or telephone card the tax rate shall be 12.5 percent of the amount of bill or sales price of internet pre-paid card or prepaid telephone card or sale of units through any electronic medium or whatever form.
The phone companies preparing bills or selling prepaid cards are responsible to collect withholding tax on behalf of the FBR from telephone subscribers, internet subscribers, purchaser of internet prepaid cards.
The withholding tax collected from phone usage is adjustable against the taxpayers’ liability.
The FBR incurred a loss of Rs55 billion in 2018/2019 due to suspension of withholding tax on telecommunication services by the Supreme Court of Pakistan.