Karachi, September 15, 2024 – The Federal Board of Revenue (FBR) has updated the withholding tax rates on the usage of telephone and internet services for the tax year 2024-25. This update follows the release of the FBR’s withholding tax card for the current tax year, which outlines the applicable tax rates under Section 236 of the Income Tax Ordinance, 2001.
For the tax year 2024-25, the FBR has announced the following withholding tax rates on telephone and internet services:
1. Telephone Subscribers (Non-Mobile):
o For telephone subscribers, excluding mobile phone users, where the monthly bill exceeds Rs 1000, a 10% withholding tax will be applied on the portion of the bill exceeding this threshold.
o This tax rate is targeted at landline users with higher billing amounts.
2. Mobile and Internet Subscribers (Including Prepaid Cards):
o For users of mobile phones, internet services, and prepaid telephone or internet cards, a 15% withholding tax will be applied to the total bill or the sales price of the prepaid card.
o This also includes the sale of units through any electronic medium, ensuring that tax is deducted on all forms of prepaid telecommunications and internet services.
3. Persons Listed in Income Tax General Order Under Section 114B:
o For individuals and entities listed under Section 114B of the Income Tax Ordinance, 2001, a significantly higher withholding tax rate of 75% will be imposed on their telephone and internet bills or the sale price of prepaid cards.
o This elevated rate applies to taxpayers who have not complied with the income tax filing requirements set by the FBR.
The updated withholding tax rates aim to broaden the tax base and ensure compliance from all subscribers, including non-filers. By imposing a higher rate of withholding tax on non-compliant individuals and businesses, the FBR seeks to encourage timely filing of tax returns and proper documentation of income.
These tax updates reflect the government’s ongoing efforts to increase revenue collection through direct taxation methods, such as withholding taxes. By targeting the telecommunications and internet sectors, which have seen exponential growth in recent years, the FBR aims to tap into these revenue streams while promoting tax compliance.
Subscribers are advised to review their monthly bills and ensure that the appropriate tax rates are being applied. It is also crucial for non-filers to become compliant to avoid higher tax rates on their telecom and internet services.
