Karachi, January 22, 2024 – The tax rates for telephone and internet usage in Pakistan for the tax year 2024 have been officially notified through amendments to the Income Tax Ordinance, 2001.
The tax authorities in Pakistan have clarified that these rates will apply under Section 236 of the Income Tax Ordinance, 2001, and encompass various aspects of telecommunication and internet services.
According to Section 236 of the Income Tax Ordinance, 2001:
(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 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 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.
Rates of collection of tax under section 236 –
(a) In the case of a telephone subscriber (other than a mobile phone subscriber) where the amount of the monthly bill exceeds Rs. 1000: 10% of the exceeding amount of the bill.
(b) In the case of a subscriber of internet, mobile telephone, and pre-paid internet or telephone card: 15% of the amount of the bill or sales price of internet pre-paid card or prepaid telephone card or sale of units through any electronic medium or whatever form.
These tax rates are intended to streamline the taxation process for telecommunication and internet services in Pakistan. The provision for the exemption of advance tax for specific entities, such as the government, foreign diplomats, diplomatic missions, and individuals with exempt income, aims to ensure a fair and equitable application of these tax regulations.
For telephone subscribers (excluding mobile phone subscribers) with monthly bills exceeding Rs. 1000, a 10% advance tax will be levied on the exceeding amount of the bill. On the other hand, subscribers of internet, mobile telephones, and pre-paid services will be subject to a 15% advance tax on the total amount of their bill or the sales price of pre-paid cards or units.
It is crucial for service providers and sellers of pre-paid cards or units to adhere to these regulations to avoid any legal complications. The tax authorities emphasize the importance of transparent billing and timely collection of advance taxes to facilitate a smooth taxation process.
These amendments to the tax rates on telephone and internet services are part of the government’s ongoing efforts to enhance revenue collection and ensure a fair distribution of the tax burden among citizens and entities utilizing telecommunication and internet services in Pakistan.
