Federal Board of Revenue (FBR) has notified withholding tax rates on use of phone and internet applicable during the year 2022-2023.
The FBR issued the withholding tax card 2022-2023 after incorporating amendments made through Finance Act, 2022 to the Income Tax Ordinance, 2001.
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Tax authorities collect withholding tax on the usage of phone and internet under Section 236 of the Income Tax Ordinance, 2001.
Following are the tax rates and text of Section 236 of the Ordinance:
WITHHOLDING TAX RATES:
— In the case of a telephone subscriber (other than mobile phone subscriber) where the amount of monthly bill exceeds Rs1,000, the tax rate is 10 per cent of the exceeding amount of the bill.
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— In the case of subscriber of internet, mobile telephone and pre-paid internet or telephone card, the tax rate is 15 per cent of the amount of bill or sales prices of internet pre-paid card or prepaid telephone card or sale of unit through any electronic medium or whatever form.
Section 236: 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;
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(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.
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(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.
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(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.
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