The government is considering raising the withholding tax (WHT) on cellular services from 10 percent to 15 percent in the forthcoming mini-budget.

The advance tax on telecom services was originally cut from 12.5 percent to 10 percent in the state budget for FY2021-22. The government also decided to reduce the advance tax on telecom consumers by another two percent to eight percent for the fiscal year 2023 — a decision that was welcomed by stakeholders and the general public.

However, it appears that the government is prepared to reverse its decision to raise revenue in the second half of this fiscal year, with a five-percentage-point hike in advance tax on the horizon. If the draft proposition is implemented, the cellular advance tax will be raised to a historic high of 15 percent.

Other reports suggest that the Federal Board of Revenue (FBR) has recommended a 50 percent increment in taxes on telecom customers in the mini-budget to end the various tax exemptions that were announced in the federal budget in June.

WHT is currently collected at a rate of 10 percent from all telecom users, regardless of their taxable obligations. Only about 2.9 million individuals from a population of 220 million (one percent of the total population) file income tax returns. Despite the fact that the majority of Pakistan’s population has non-taxable incomes, these individuals are required to pay WHT, which they will never be able to recover.

Experts have demanded that the government support the Prime Minister’s vision of Digital Pakistan by lowering taxes. They opined that high taxes may jeopardize the Digital Pakistan agenda as millions of Pakistanis are already unable to afford most mobile phone services.

Source: Pro Pakistani