In another populist verdict, the Supreme Court of Pakistan on Monday suspended deduction of taxes imposed by the federal government on pre-paid cell phone cards.
CJP Mian Saqib Nisar ordered the suspension, while heading a three-judge bench hearing a suo motu case regarding an increase in taxes on pre-paid cards at the top court’s Lahore Registry.
The authorities concerned were given two days to implement court orders.
The CJP said that taxes should be taken only from users whose mobile phone usage is above the set limit. He further directed authorities to draft a comprehensive policy regarding deduction of taxes on mobile phone usage.
“Service providers and Federal Bureau of Revenue (FBR) charge taxes on pre-paid cards and are looting people,” the bench remarked.
“How can taxes be charged from those who do not fall in the tax net?” the bench asked the FBR chairman.
The bench further said, “It is illegal that Rs64.38 are charged as taxes on a Rs100 pre-paid scratch card.” Last month, the CJP had ordered federal and provincial governments and the FBR to respond as to why so many taxes were being deducted on pre-paid scratch cards.
Earlier, the FBR had explained to the SC that every time a consumer loaded a Rs100 mobile card, 12.5 percent of the amount got deducted as adjustable withholding tax, while 10 percent went to the telecom company as service charges.
With the telecom company taking its cut, the 19.5 percent sales tax also kicked in. However, it is applied only to the telecom company’s 10 percent rather than the entire Rs100 card. As per the FBR calculation, the net amount left with the consumer for actual consumption on a Rs100 charge is Rs61.93.
Published in Daily Times, June 12th 2018.
