STAFF REPORT IBD: The local mobile operators have joined hands to seek governments exemption for collection of sales tax on interconnection charges that they charge from customers.

According to reports, the Federal Board of Revenue is currently in process of evaluating cellular firms application to seek sales tax exemption on interconnection charges under the section 65 of the Sales Tax Act, 1990.

The cellular companies say that sales tax is not applicable on interconnection charges. It may be recalled that interconnection charges of 90 paisas per minute are charged from customers for cross-network calls.

According to sources, the examining the issue and no notification has so far been issued in this regard. The draft of the notification is based under the provisions of section 65 of the Sales Tax Act, 1990 which proposes that the FED in sales tax mode should not be collected prior to July 1, 2012.

It may, by a notification in the official Gazette, direct that the tax not levied or short levied as a result of that inadvertent practice, shall not be required to be paid for the period prior to the discovery of such inadvertent practice.

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