The Federal Board of Revenue (FBR) has announced the updated rates of withholding tax on the usage of telephone and internet services for the fiscal year 2021-2022.
These revised rates have been issued by the revenue body, taking into account amendments made to the Income Tax Ordinance, 2001 through the Finance Act, 2021.
The collection of withholding tax on telephone and internet usage falls under Section 236 of the Income Tax Ordinance, 2001. The updated withholding tax rates are detailed in the Withholding Tax Card for the year 2021-2022.
Withholding Tax Rates for Telephone Subscribers and Internet Users:
(a) Telephone Subscribers and Internet Users:
• No tax on monthly bills up to Rs1,000.
• For bills exceeding Rs1,000, the tax rate shall be 10%.
(b) Internet, Mobile Telephone, and Prepaid Cards:
• The tax rate for subscribers of internet, mobile telephone, and prepaid cards is 10% for the tax year 2022.
• From 2023 onwards, the tax rate will be 8% of the amount billed or the sales price of internet prepaid cards, prepaid telephone cards, or the sale of units through any electronic medium or in any form.
The responsibility for collecting the withholding tax rests with the person preparing telephone or internet bills or issuing/selling prepaid cards for mobile phones/internet. This tax is collected along with the payment of telephone bills or at the time of the issuance or sale of prepaid cards.
It’s important to note that the withholding tax on telephone and internet usage is adjustable against the individual’s overall tax liability.
These revised withholding tax rates are designed to reflect changes in the tax landscape and align with the amendments introduced through the Finance Act, 2021. The FBR’s approach to withholding tax aims to ensure a fair and transparent tax collection system while considering the affordability of services for consumers.
These rates play a significant role in revenue generation for the government and contribute to the overall tax structure in the country. The FBR’s continuous efforts to update and communicate withholding tax rates demonstrate its commitment to keeping tax regulations in line with the evolving economic landscape.
As taxpayers navigate the fiscal year 2021-2022, these withholding tax rates will be applicable, and individuals and businesses are encouraged to familiarize themselves with these changes to ensure compliance with tax regulations and obligations. The FBR’s commitment to providing clear guidelines through the Withholding Tax Card facilitates transparency and helps taxpayers understand their responsibilities in the evolving tax environment.
