Pre-paid cell phone users robbed of Rs40b over WHT

STAFF REPORT ISB: The pre-paid mobile phone users were robbed of by Rs. 40 billion, when 14 percent withholding tax was automatically deducted from every card recharge they made last year.

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The Federal Board of Revenue received Rs. 43 billion on account of withholding tax during 2014-15. Only 0.9 million out of 120 million total users deposited tax return claims and got back what they paid in advance. The remaining amount of more than Rs.40 billion was automatically confiscated by the government at the end of the financial year, officials of FBR told the Senate Standing Committee on IT.

The FBR officials informed that on every mobile card re-charge of Rs100, mobile phone companies deduct 14 percent withholding tax, while 19.5 is charged as federal excise duty in capital or as provincial tax in provinces.

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Answering a question, the FBR officials clarified that the telecom companies and thousands of franchisers were charging the 14 percent advance tax from consumers on every recharge, but neither FBR nor PTA has human or technological expertise to check whether the huge advance tax collected from users was actually deposited in national exchequer or not.

This information was surprising for many of the body members who were unable to understand that why the government was charging 14 percent withholding tax from all the users.

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The committee members reprimanded the Ministry of IT for charging irrational taxes from the telecom sector.

During the discussion, it was revealed that PTA has no mechanism to check the actual number of mobile phone users in the country and it solely relies on telcos for all the statistics.

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