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Tax collection on prepaid, post paid consumers suspended on SC orders, Asad tells NA

Tax collection on prepaid, post paid consumers suspended on SC orders, Asad tells NA

ISLAMABAD: Federal Finance Minister Asad Umar has said that Supreme Court has suspended the collection of tax through interim orders for both prepaid and post-paid consumers of cellular companies.

In reply to a question of MNA Ch. Iftikhar Nazir at the National Assembly, whether it is a fact that tax exemptions extended to the consumers of cellular phone companies on the directions of supreme court, do not extend to the users of post-paid consumers; if so, the reasons thereof; and what steps are being taken to extend tax exemptions to the postpaid users, and rationalize the rate of taxes to the postpaid users, as it is being done for prepaid users?

Finance Minister stated that under the provision of Section 236 of the Income Tax Ordinance, 2001 there is an adjustable advance income tax on telephone and internet users including tax on telephone bills and prepaid telephone cards. There is no exemption under the aforesaid law.

However, Supreme Court vide an order dated 11-06-2018 in Human Rights Case No.18877 of 2018 has suspended collection, of withholding tax on prepaid calls and internet services by using mobile phones.

The said order is however subject to final decision of the supreme court in the aforesaid case.  He said the supreme court in its short order dated 1610-2018 extended the suspension of withholding taxes to the post-paid consumers of the cellular companies.

As stated above, the Supreme Court has suspended the collection of tax through above mentioned interim orders for both prepaid and post-paid consumers of cellular companies. There is an advance income tax at 12.5% in case of both prepaid telephone card and mobile phone subscriber. Earlier the tax rate was 15% which was rationalized to 14% vide Finance Act, 2014 and further rationalized to 12.5% through Finance Act, 2017.