SC restores all taxes on cellular top-ups

The Supreme Court of Pakistan has restored deduction of withholding tax, sales tax and service charges on pre-paid cellular scratch cards by vacating its earlier suspension order, on Wednesday.

Chief Justice Asif Saeed Khosa, while dictating an order after a daylong hearing, said: “For the reasons to be recorded later this human right cell case and all interim orders are disposed of”.

Chief Justice of Pakistan (CJP) Asif Saeed Khosa announced a short order while heading a three-member bench of Justice Qazi Faez Isa and Justice Ijazul Ahsan. He also said the court would not interfere in public revenue and tax collection propositions.

The apex court had taken up a case, on public complaints, relating to unreasonable deduction of tax/other charges from mobile phone pre-paid cards and easy load, besides deducting Rs40 in the form of different taxes for every Rs100 charge.

The court was told during the hearing that the state had suffered a loss of about Rs90 billion since the issuance of the suspension order.

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The apex court was informed at the previous hearing that about Rs120 billion was earned by the Punjab government, Rs90bn by the Sindh government, Rs36bn by the Balochistan government and Rs55bn by Khyber Pakhtunkhwa government through such deductions annually.

It was last year on May 3rd when taking suo motu notice, that time chief justice Mian Saqib Nisar asked whether deduction of Rs40 on every scratch card of Rs100 was not exploitation and observed that the matter involved public interest.

The consumers were paying 42 percent tax, including 19.5 percent FED, 12.5 percent WHT and 10 percent service/ maintenance charges on every Rs100 card, earlier.

Before the suspension orders, on each calling card of Rs100, withholding tax (income tax) of 12.5 percent was being deducted under Section 236 of the Income Tax Ordinance 2001 by the Federal Board of Revenue (FBR).

Whereas 17pc excise duty was charged from the users in Islamabad Capital Territory. The provinces were charging 19.5pc sales tax on services from the users. In addition to that, the cellular companies were deducting 10pc for the services rendered by them.