Postpaid users are still paying tax on mobile cards

Cellular companies are still charging taxes to their postpaid customers even after the Supreme court announced the suspension of taxes on mobile cards.

The suspension of mobile taxes is only made applicable to prepaid users as postpaid customers are still not enjoying the tax-free phone. Postpaid users in Pakistan are currently being charged 17.5-18.5% GST and 12.5% withholding tax. Despite being a small number of all users (less than 0.5% of the entire base), postpaid users contributes an average revenue much larger than prepaid users.

Just to recall, the prepaid consumers were previously paying 42% tax on per mobile card recharge. These include 19.5% sales tax that goes to the government, 12.5% of adjustable withholding tax and 10% service/ maintenance charges which go to the telecom operator on every Rs. 100 card recharge. This was the reason that a customer was getting Rs. 61.93 balance on Rs. 100 recharge.

Read Also: All taxes suspended on Mobile Balance Cards, 100 PKR will credit 100 PKR to your account

On 12th June, Chief Justice of Pakistan had ordered telecom companies to suspend mobile taxes on mobile cards and top-ups but as the statement was vague the telecom companies utilized the statement in their favor and issued relief for prepaid users but not for postpaid customers.

It is important to mention that federal government is losing around Rs. 120 million per day due to not charging taxes while provincial governments (combined) are losing around Rs. 160 million per day due to the suspension of GST on mobile cards.

Mentioning a possible solution, the Supreme court would devise the same policy for both prepaid and postpaid user. SC either suspend taxes for both customers or an equal reduced tax should be imposed on both users so, postpaid customers would not feel biased and discriminated.