The Federal Board of Revenue (FBR) collects withholding income tax on telephone and internet usage under Section 236 of Income Tax Ordinance, 2001.
Rates of collection of tax under section 236 under Income Tax Ordinance, 2001 amended up to June 30, 2021.
The tax rates are:
(a) 10 per cent of the exceeding amount of bill in the case of a telephone subscriber (other than mobile phone subscriber) where the amount of monthly bill exceeds Rs.1000.
(b) in the case of subscriber of internet, mobile telephone and pre-paid internet or telephone card, the tax rate shall be
10 per cent for tax year 2022 and 8 per cent onwards 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.
Following is the text of Section 236:
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;
(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.
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