Supreme Court suspends tax deduction on mobile phone cards

LAHORE - Supreme Court of Pakistan on Monday suspended all taxes deducted by cellular companies on mobile phone recharge, local media reported.

A two-member bench, headed by Chief Justice Mian Saqib Nisar, issued the ruling while hearing a suo motu notice the withholding tax imposed on mobile recharge at apex court's Lahore Registry.

The apex court gave a two-day deadline to the companies for implementing the order. It also observed that tax should be collected from those who used the mobile phones beyond the limits.

The court also ordered to form a comprehensive plan for deducting taxes on mobile cards, adding that the taxes - withholding tax, federal excise duty and others - will not be deducted until the final verdict in the case is announced.

During the hearing, Justice Ijazul Ahsan remarked how the tax can be collected from a vendor who does not come under the tax net.

Replying to a question, the counsel for companies said that tax was deducted when the user subscribes a package.

To which, Justice Ahsan observed that Rs68 added to the user's account when a Rs100 mobile phone card it topped up.

CJP Nisar remarked, "Mobile packages have tarnished our culture".

Currently, the consumers are paying 42 percent tax, including 19.5 percent FED, 12.5 percent WHT and 10 percent service/ maintenance charges on every Rs.100 card.

The CJP took the notice on May 3 and had issued notices to the federal government and cellular companies, asking “under which head an amount of Rs40 is being charged on every Rs100 recharge.”

Earlier, Senator Muhammad Ateeq Shiekh during the meeting said, consumers, have to pay Rs28 on Rs100 card which is unfair. The government should remove advance and withholding tax being charged on Rs100 mobile card, he demanded.