With the federal government’s mini budget increasing the advance tax rate on telecom services from 10% to 15%, users who charge a balance of Rs 100 would now get a balance of Rs 72.80.
According to the mini-budget plan, advance tax will be taken by Rs 13 on a consumer’s Rs 100 balance, up from Rs 9 10 paise before. Consumers would continue to pay Rs 14.80 paise in sales tax on a balance of Rs 100.
As a result, after the mini-budget, telecom users would be charged a tax of Rs. 27–20 paise in the form of sales tax and an advance tax on a balance of Rs. 100. Prior to the mini-budget, consumers could receive a Rs 76 balance for 10 paise on a Rs 100 balance. Pakistan ranks second in South Asia in terms of tax rates.
Increasing the advance tax in the mini-budget would also raise the cost of telecom and internet services in Pakistan. Although the advance tax can be lowered, 98 percent of Pakistan’s 187 million telecom service consumers are prepaid subscribers who are low-income and do not file returns. It should be noted that the federal government reduced the holding tax from 12% to 5%.
The administration pledged to lower the holding tax by 8%, but in order to overcome the tax deficit, the tax burden on mobile phone customers was increased.
