How much tax is deducted on Mobile phone top ups? PTA Finally Clarifies

The Pakistan Telecommunication Authority (PTA) on Friday clarified the deduction of General Sales Tax (GST) in addition to Withholding tax on prepaid recharge.

The regulator stated that the Cellular Mobile Operators (CMO) were deducting only WHT and GST/Federal Excise Duty on the prepaid recharge/reload after the restoration of taxes by the Supreme Court of Pakistan from April 2019.

Explaining the tax deduction process, PTA said that on the recharge of Rs.200, the balance provided to the user is Rs.177.778 (and not Rs.152 as reported on the social media) after the deduction of Rs. 22.222 against withholding tax@ 12.5%[email protected]% is applied on per call, SMS, data usage basis or opting for any additional bundle/package.

“When a user consumes its remaining balance of Rs. 177.778, a total of Rs. 29.01 as GST is charged. In the same way, if a package is priced at Rs. 167 (without GST), the same, requires a prepaid balance of Rs. 199.56 (Price + GST = Rs. 167 + Rs. 32.56),” it added.

The regulator was of the view that due to lack of clarity on the deduction of GST in addition to WHT, mobile subscribers are assuming that CMOs are charging well above applicable taxes, which is not correct.

Furthermore, PTA informed that it has fixed a ceiling on call setup charges @ Rs. 0.15 per call. PTA is vigilant about the rates/tariffs being charged by CMOs & action will be initiated on any reported incidence of charging above the published tariffs & applicable taxes in accordance with the law